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Have the Biggest U.S. Banks Become Less Complex?
The global financial crisis, and the ensuing Dodd-Frank Act, identified sizeand complexity as determinants of banks? systemic importance, increasing the potential risks to financial stability. While it?s known that big banks haven?t shrunk, the question that remains is: have they simplified? In this post, we show that while the largest U.S. bank holding companies (BHCs) have somewhat simplified their organizational structures, they remain very complex. The industries spanned by entities within the BHCs have shifted more than they have declined, and the countries in which some large BHCs have ...
Complexity in large U.S. banks
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 ...
Complexity in Large U.S. Banks
The structural complexity of the largest U.S. bank holding companies (BHCs) has been changing. Following the global financial crisis, the simplification of bank complexity was a policy priority. Using a variety of measures of organizational, business, and geographic complexity, the authors show that large U.S. BHCs nonetheless remain very complex. Organizational complexity has declined, as the average number of legal entities within large U.S. BHCs has fallen. By contrast, the range of industries spanned by legal entities within the BHCs has shifted more than it has declined, especially ...