IDEAS home Printed from https://ideas.repec.org/a/fip/fednep/00012.html
   My bibliography  Save this article

Evolution in bank complexity

Author

Listed:
  • James J. McAndrews
  • James Traina
  • Nicola Cetorelli

    (Brown University
    National Bureau of Economic Research
    Research and Statistics Group
    Federal Reserve Bank)

Abstract

This study documents the changing organizational complexity of bank holding companies as gauged by the number and types of subsidiaries. Using comprehensive data on U.S. financial acquisitions over the past thirty years, the authors track the process of consolidation and diversification, finding that banks not only grew in size, but also incorporated subsidiaries that span the entire spectrum of business activities within the financial sector. Their analysis shows that bank holding companies added banks to their firms in the early 1990s, but gradually expanded into nonbank intermediation through acquisitions of already?formed subsidiaries in the years following. They view this emergence as consistent with a move toward a model of finance oriented to securitization, and consider the implications of this new complexity for supervision and resolution.

Suggested Citation

  • James J. McAndrews & James Traina & Nicola Cetorelli, 2014. "Evolution in bank complexity," Economic Policy Review, Federal Reserve Bank of New York, pages 85-106.
  • Handle: RePEc:fip:fednep:00012
    as

    Download full text from publisher

    File URL: https://www.newyorkfed.org/medialibrary/media/research/epr/2014/1412cet2.pdf
    File Function: Full text
    Download Restriction: no

    References listed on IDEAS

    as
    1. מחקר - ביטוח לאומי, 1900. "סקירת ספרים חדשים," Working Papers 1098, National Insurance Institute of Israel.
    2. מחקר - ביטוח לאומי, 1900. "ביטוח נפגעי תאונות," Working Papers 746, National Insurance Institute of Israel.
    3. מחקר - ביטוח לאומי, 1900. "סקירת ספרים חדשים," Working Papers 1110, National Insurance Institute of Israel.
    4. אהרון יורק & אלישבע סדן & יוסף קטן & שרון אסיסקוביץ & ישראל דורון, 1900. "סקירת ספרים חדשים," Working Papers 989, National Insurance Institute of Israel.
    5. מחקר - ביטוח לאומי, 1900. "סקירת ספרים חדשים," Working Papers 1037, National Insurance Institute of Israel.
    6. מוריה אבנימלך & תמר בן יוסף & גילה לאור & חן למפרט & אלישבע סדן, 1900. "סקירת ספרים חדשים," Working Papers 920, National Insurance Institute of Israel.
    7. מחקר - ביטוח לאומי, 1900. "ביטוח נפגעי עבודה," Working Papers 734, National Insurance Institute of Israel.
    8. מחקר - ביטוח לאומי, 1900. "סקירת ספרים חדשים," Working Papers 941, National Insurance Institute of Israel.
    9. אורי אבירם & ישראל אור-בך & עידית בליט-כהן & דני גוטווין & אלישבע סדן & נדיר צור & דורית רואר-סטריאר & שמעון רוזביץ', 1900. "סקירת ספרים חדשים," Working Papers 1065, National Insurance Institute of Israel.
    10. Dafna Avraham & James Vickery & Patricia Selvaggi, 2012. "A Structural view of U.S. bank holding companies," Economic Policy Review, Federal Reserve Bank of New York, pages 65-81.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:eee:finana:v:57:y:2018:i:c:p:77-89 is not listed on IDEAS
    2. Adrian, Tobias & Ashcraft, Adam & Breuer, Peter & Cetorelli, Nicola, 2018. "A Review of Shadow Banking," CEPR Discussion Papers 13363, C.E.P.R. Discussion Papers.
    3. Anna Chernobai & Ali Ozdagli & Jianlin Wang, 2018. "Business Complexity and Risk Management: Evidence from Operational Risk Events in U.S. Bank Holding Companies," 2018 Meeting Papers 1146, Society for Economic Dynamics.
    4. repec:eee:finsta:v:37:y:2018:i:c:p:1-10 is not listed on IDEAS
    5. Philippon, Thomas, 2016. "The FinTech Opportunity," CEPR Discussion Papers 11409, C.E.P.R. Discussion Papers.
    6. Krause, Thomas & Sondershaus, Talina & Tonzer, Lena, 2017. "Complexity and bank risk during the financial crisis," Economics Letters, Elsevier, vol. 150(C), pages 118-121.
    7. Stefan Avdjiev & Stephan Binder & Ricardo Sousa, 2017. "External debt composition and domestic credit cycles," BIS Working Papers 627, Bank for International Settlements.
    8. Krause, Thomas & Sondershaus, Talina & Tonzer, Lena, 2016. "The Role of Complexity for Bank Risk during the Financial Crisis: Evidence from a Novel Dataset," IWH Discussion Papers 17/2016, Halle Institute for Economic Research (IWH).
    9. Ali K. Ozdagli & Jianlin Wang & Anna Chernobai, 2016. "Business complexity and risk management: evidence from operational risk events in U. S. bank holding companies," Working Papers 16-16, Federal Reserve Bank of Boston, revised 01 Oct 2016.

    More about this item

    Keywords

    Organizational complexity; Financial intermediation;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednep:00012. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Farber). General contact details of provider: http://edirc.repec.org/data/frbnyus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.