The Optimal Size of the Financial Sector

Conference dates: Tuesday, 02 September 2014

Meeting room: Eurotower, CVII (2nd floor)

Venue: European Central Bank, Frankfurt am Main

Conference Agenda

8:30 a.m. Registration and coffee
9:00 a.m. Welcome address by Benoît Cœuré, European Central Bank  more

Session 1
Rents and misallocation of talent

Chair: Philipp Hartmann, European Central Bank
9:30 a.m. Cream skimming in financial markets paper
Patrick Bolton, Columbia University; Tano Santos, Columbia University; Jose Scheinkman, Princeton University

Discussant: Augustin Landier, Toulouse School of Economics
10:15 a.m. Wages and human capital in finance: International evidence, 1970-2005 paper
Hamid Boustanifar, Norwegian Business School; Everett Grant, University of Virginia; Ariell Reshef, University of Virginia

Discussant: Rudiger Fahlenbrach, Swiss Finance Institute
11 a.m. Coffee break

Session 2
Efficiency and contribution to the real economy

Chair: Francesco Mazzaferro, European Systemic Risk Board Secretariat
11.30 a.m. Banking in Europe: Too much of a good thing? paper
Sam Langfield, European Systemic Risk Board Secretariat; Marco Pagano, University of Naples Federico II

Discussant: Franklin Allen, Imperial College, London
12:15 p.m. Do asset price booms have real effects? paper
Indraneel Chakraborty, Southern Methodist University; Itay Goldstein, University of Pennsylvania; Andrew MacKinlay, Southern Methodist University

Discussant: André Sapir, Université Libre de Bruxelles
1:00 p.m. Lunch

Session 3
Complexity, vulnerability, and systemic risk

Chair: Ignazio Angeloni, European Central Bank
2:00 p.m. Vulnerable banks paper
Robin Greenwood, Harvard Business School; Augustin Landier, Toulouse School of Economics; David Thesmar, HEC Paris

Discussant: Dirk Schoenmaker, Duisenberg School of Finance
2:45 p.m. Bank size, complexity, and systemic risk: Some international evidence paper
Luc Laeven; Lev Ratnovski; Hui Tong (all International Monetary Fund)

Discussant: Steven Ongena, University of Zurich
3:30 p.m. Coffee break
4:00 p.m. Policy panel
Chair: Vítor Constâncio, European Central Bank
Martin Hellwig, Max Planck Institute; Thorsten Beck, Cass Business School; Adair Turner, Institute for New Economic Thinking; Axel Weber, UBS
6:00 p.m. End of conference
7:30 p.m. Dinner (by invitation)

Venue

The conference will be held in room CVII at the European Central Bank, Kaiserstrasse 29, Frankfurt, Germany, on 2 September 2014.
There are a limited number of places available. Please contact the organisers (Sam Langfield and Alex Popov) if you would like to receive an invitation to the conference.

Background

The financial sector is a key engine of economic growth. However, an increasing body of evidence suggests that an oversized financial sector can be detrimental to financial stability and economic growth under certain circumstances.

This conference brings together senior policy-makers and academics to examine the circumstances in which the financial sector could be considered “too big”. In doing so, the conference is designed around three sessions, each devoted to a particular mechanism by which an oversized financial sector could damage financial stability and economic growth.

  • Participants in the first session will consider whether an oversized financial sector could attract too much high-quality human capital.
  • The second session will focus on whether an oversized financial sector could divert financial capital away from productive projects and towards asset price bubbles.
  • And, in the third session, participants will discuss whether oversized financial sectors might be more exposed to systemic risk.
The conference will conclude with a panel discussion to examine the implications of these three mechanisms for public policy.

Organising Committee

  • Sam Langfield (European Systemic Risk Board Secretariat)
  • Alex Popov (European Central Bank)