Measures of Complexity of Global Banks
39 Pages Posted: 7 Apr 2014
Date Written: March 31, 2014
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
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