Too connected to fail: The regulation of systemic risk within Australia's superannuation system

Donald, S; Bateman, H; Buckley, R; Liu, K; Nicholls, R

Too connected to fail: The regulation of systemic risk within Australia's superannuation system

Donald, S Bateman, H Buckley, R Liu, K Nicholls, R

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Publisher:: Oxford University Press (OUP)
Publication Type:: Journal Article
Citation:: Journal of Financial Regulation, 2016, 2, (2), pp. 56-78
Issue Date:: 2016-08-01

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Field	Value	Language
dc.contributor.author	Donald, S
dc.contributor.author	Bateman, H
dc.contributor.author	Buckley, R
dc.contributor.author	Liu, K
dc.contributor.author	Nicholls, R https://orcid.org/0000-0001-9764-8900
dc.date.accessioned	2022-08-18T22:32:20Z
dc.date.available	2022-08-18T22:32:20Z
dc.date.issued	2016-08-01
dc.identifier.citation	Journal of Financial Regulation, 2016, 2, (2), pp. 56-78
dc.identifier.issn	2053-4833
dc.identifier.issn	2053-4841
dc.identifier.uri	http://hdl.handle.net/10453/160464
dc.description.abstract	The funds, entities, and regulators involved in the Australian superannuation industry together comprise a system that is complex and dynamic. The differentiation between roles and the distribution of responsibility amongst entities provides the system with a measure of resilience against the local failure of any one of the entities. However, the interconnections that bind and constitute the system also have the potential to transmit risks within the system, creating the potential for the impact of local failures to amplify through propagation, or in other ways to pose risks to the system as a whole. This article uses a new data set on 200 of Australia's largest superannuation funds to map and assess those links and to identify the challenges those links pose to the scheme of prudential regulation applied to the superannuation system in Australia. It finds that the function of the entity and the legal form of the linkages, both of which are more variegated than typically occurs in banking sector transactions, crucially influences whether, and to what extent, various types of failures might be transmitted across the system. It also finds that we may be materially under-estimating the possibility that local failures in the superannuation system, which are a near certainty given the current regulatory risk appetite, will have a systemic impact. The findings have broad application across pension and institutional investment markets worldwide.
dc.language	en
dc.publisher	Oxford University Press (OUP)
dc.relation.ispartof	Journal of Financial Regulation
dc.relation.isbasedon	10.1093/jfr/fjv010
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1502 Banking, Finance and Investment, 1605 Policy and Administration, 1801 Law
dc.title	Too connected to fail: The regulation of systemic risk within Australia's superannuation system
dc.type	Journal Article
utslib.citation.volume	2
utslib.for	1502 Banking, Finance and Investment
utslib.for	1605 Policy and Administration
utslib.for	1801 Law
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Law
utslib.copyright.status	closed_access	*
dc.date.updated	2022-08-18T22:32:19Z
pubs.issue	2
pubs.publication-status	Published
pubs.volume	2
utslib.citation.issue	2

Abstract:

The funds, entities, and regulators involved in the Australian superannuation industry together comprise a system that is complex and dynamic. The differentiation between roles and the distribution of responsibility amongst entities provides the system with a measure of resilience against the local failure of any one of the entities. However, the interconnections that bind and constitute the system also have the potential to transmit risks within the system, creating the potential for the impact of local failures to amplify through propagation, or in other ways to pose risks to the system as a whole. This article uses a new data set on 200 of Australia's largest superannuation funds to map and assess those links and to identify the challenges those links pose to the scheme of prudential regulation applied to the superannuation system in Australia. It finds that the function of the entity and the legal form of the linkages, both of which are more variegated than typically occurs in banking sector transactions, crucially influences whether, and to what extent, various types of failures might be transmitted across the system. It also finds that we may be materially under-estimating the possibility that local failures in the superannuation system, which are a near certainty given the current regulatory risk appetite, will have a systemic impact. The findings have broad application across pension and institutional investment markets worldwide.

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http://hdl.handle.net/10453/160464