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Measures of global bank complexity

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Abstract

Size and complexity are customarily viewed as contributing to the too-big-to-fail status of financial institutions. Yet there is no standard accepted metric for the complexity of a ?typical? financial firm, much less for a large firm engaged in global finance. This article provides perspective on the issue of complexity by examining the number, types, and geographical spread of global financial institutions? affiliates. The authors show that standard measures of institution size are strongly related to total counts of affiliates in an organization, but are more weakly aligned with other measures of complexity. Considerable heterogeneity exists across global financial organizations in measures of business and geographic complexity. Some business models and geographic tendencies have strong regional characteristics that are linked to the organization?s parentage. Since complexity is distinct from organizational size, the authors argue that its consequences and its policy relevance warrant much broader study.

Suggested Citation

  • Nicola Cetorelli & Linda S. Goldberg, 2014. "Measures of global bank complexity," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 107-126.
    • Handle: RePEc:fip:fednep:00013
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    References listed on IDEAS

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    More about this item

    Keywords

    Organizational complexity; Global banks;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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