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Banks Develop a Nonbank Footprint to Better Manage Liquidity Needs

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Abstract

In a previous post, we documented how, over the past five decades, the typical U.S. bank has evolved from an entity mainly focused on deposit taking and loan making to a more diversified conglomerate also incorporating a variety of nonbank activities. In this post, we show that an important driver of the evolution of this new organizational form is the desire of banks to efficiently manage liquidity needs.

Suggested Citation

  • Nicola Cetorelli & Saketh Prazad, 2025. "Banks Develop a Nonbank Footprint to Better Manage Liquidity Needs," Liberty Street Economics 20251118b, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:102119
    DOI: 10.59576/lse.20251118b
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    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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