This project maps and analyses for the first time the sources of endogenous systemic risk in the superannuation system. It investigates how aspects of the internal structure of the system undermine the apparent robustness of what superficially appears to be a highly diverse system. Examples of the ‘endogenous’ risks in the superannuation system are:

• market concentration in key decision and activity nodes, such as custodians and administrators, that increase co-dependence between funds;
• interdependence, such as co-investment by funds and shared regulatory capital, that expose the system to risk cascades;
• market dynamics, such as peer group emulation, and common information structures, such as credit ratings, market data sources and investment technologies, that result in correlated behaviour across the system.

Opinion Pieces

Custodian Banks: Too Big to Get Bigger?

A small number of custodian banks play a vital role in Australian superannuation. This invites analysis as to whether concentration in the sector is problematic.
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