Complexity in Large U.S. Banks

31 Pages Posted: 26 Feb 2019

See all articles by Linda S. Goldberg

Linda S. Goldberg

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

April Meehl

University of Wisconsin - Madison

Date Written: February 2019

Abstract

While both size and complexity are important for the largest U.S. bank holding companies (BHCs), specific types of complexity and their patterns across banks are not well understood. We introduce a range of measures of organizational, business, and geographic complexity. Comparing 2007 with 2017, we show that large U.S. BHCs remain very complex, with some declines along organizational and geographical complexity dimensions. The numbers of legal entities within some large BHCs have fallen. By contrast, the multiple industries spanned by legal entities within the BHCs have shifted more than they have declined, especially within the financial sector. Nonfinancial entities within U.S. BHCs still tilt heavily toward real-estate-related businesses and span numerous other industries. Fewer large BHCs have global affiliates, and the geographic span of the most complex has declined. Favorable tax treatment locations still attract a significant share of the foreign bank and nonbank entities, while fewer legal entities are present in informationally opaque locations.

Keywords: bank, bank holding company, size, complexity, global bank

JEL Classification: F32, G11, G20

Suggested Citation

Goldberg, Linda S. and Meehl, April, Complexity in Large U.S. Banks (February 2019). FRB of New York Staff Report No. 880. Available at SSRN: https://ssrn.com/abstract=3342464 or http://dx.doi.org/10.2139/ssrn.3342464

Linda S. Goldberg (Contact Author)

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

April Meehl

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

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