Measures of Complexity of Global Banks

39 Pages Posted: 7 Apr 2014

See all articles by Nicola Cetorelli

Nicola Cetorelli

Federal Reserve Bank of New York

Linda S. Goldberg

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

Date Written: March 31, 2014

Abstract

Size and complexity are viewed as contributing to the too-big-to-fail status of financial institutions. Yet, there is no standard accepted metric for an organization’s complexity, much less for a large firm engaged in global finance. We provide perspective on the issue of complexity by examining affiliate counts, types, and geography within global financial institutions. We 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, we argue that its consequences and its policy relevance warrant much broader study.

Keywords: global banks, organizational complexity

JEL Classification: G20, G21, L20, L22

Suggested Citation

Cetorelli, Nicola and Goldberg, Linda S., Measures of Complexity of Global Banks (March 31, 2014). Economic Policy Review, Volume 20, Number 2. Available at SSRN: https://ssrn.com/abstract=2421995

Nicola Cetorelli (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-5071 (Phone)
212-720-8363 (Fax)

HOME PAGE: http://nyfedeconomists.org/cetorelli/

Linda S. Goldberg

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-2836 (Phone)
212-720-6831 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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