LECTURE: An anatomy of systemic risk

Internationally renowned economist, Professor Frank Milne is visiting Bendigo to deliver a lecture on his research with John Crean, Adjunct Professor in Economics at the University of Toronto. The 2012 research will discuss a model that may assist in identifying systemic risks in businesses before they impact on their financial stability.

Money, the elixer of the economyProfessor Milne – who grew up in Bendigo - is a Bank of Montreal Professor of Economics and Finance at Canada’s Queen’s University. He is recommending a new framework for analysing credit risks in key industries that have the potential to trigger systemic credit-driven crises during downturns.

‘Some sectors, such as real estate and mining have the potential for unusually sharp downturns. Without a thorough understanding of the microeconomic and financial structure of systemically important real sectors (SIRS), banks risk getting into hot water when lending during economic downturns,’ says Professor Milne.

‘Such credit-driven crises have taken place recently in the housing crises in the USA, Spain and Ireland.”

“This is not a recent phenomenon: there has been a long history of SIRS industries in the UK, Europe, USA and in Australia.”

‘SIRS industries - real estate and mining - drive the Australian economy. These sectors are characterised by high assets to revenues, high borrowings from financial institutions, low marginal costs, intense competition and volatile cash flows.’

Professor Milne is in Australia advocating a new regulatory framework banks could use when analysing credit risks in these sectors. He says that with a better understanding of SIRS, banks can lend more prudently, reducing severe downside risks in economic downturns.

This important event has been developed by Dr Ruth Williams from the La Trobe School of Economics in Bendigo.

The free lecture for Bendigo’s financial community and La Trobe University staff and students is entitled ‘An anatomy of systemic risk.’ It will be delivered at 6pm on Wednesday 1 May at La Trobe Visual Arts Centre.

In addition to his lecture Professor Milne will receive an Honorary Doctorate in recognition of his passionate service to higher education and his contributions to economic and financial policy at national and international levels.

Professor Milne will receive his Doctor of the University (honoris causa) at a La Trobe University Bendigo graduation ceremony on Thursday 2 May.

Professor Milne will give his lecture, An Anatomy of Systemic Risk, at the La Trobe Visual Arts Centre at 6pm on Wednesday 1 May.


Media enquiries

Zerin Knight, Ph (03) 5444 7375 F (03) 5444 7526 M 0428 463 161 E z.knight@latrobe.edu.au

Tom O’Callaghan, Ph (03) 5444 7415 F (03) 5444 7526 M 0408 900 469 E t.ocallaghan@latrobe.edu.au