Complexity and riskiness of banking organizations: Evidence from the International Banking Research Network

Arbeitspapier

Complexity of banks can have important ramifications for the performance and the risks of the banking system. Financial sector reforms that were implemented in the past decade have thus aimed to reduce and to better manage the risk implications of bank complexity. Yet, surprisingly little is known about changes in complexity across countries, its drivers, and its effects. The International Banking Research Network (IBRN) used data and analytical advances to generate rich cross-country insights on the complexity and riskiness of banking organizations. The initiative has yielded four key findings. First, the largest banks in countries tend to be the more complex ones. Even controlling for size, there is substantial diversity across banking organizations in terms of complexity choices. Second, over the past decade, banking organizations have tended to reduce complexity by limiting the number of affiliates in domestic and foreign locations. Generally, however, complexity patterns are fairly persistent. Third, regulatory changes can alter both banking organization complexity and the associated risk profiles. Fourth, the link between complexity and risks involves trade-offs: diversification benefits and reductions in liquidity risk may weigh against agency problems, monitoring costs, and systemic risk contributions arising from higher complexity.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Staff Report ; No. 966

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Thema: bank complexity ; financial regulation ; international banking ; risks in banking

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Buch, Claudia M. ; Goldberg, Linda S.
• Ereignis: Veröffentlichung
• (wer): Federal Reserve Bank of New York
• (wo): New York, NY
• (wann): 2021

Weitere Informationen

• Handle: http://hdl.handle.net/10419/241159
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ