Are banks too large?

Large banks have grown significantly in size and become more involved in market-based activities since the late 1990s. Figure 1 shows how the balance-sheet size of the world’s largest banks increased two- to four-fold in the ten years prior to the crisis. Figure 2 illustrates how banks shifted from traditional lending towards market-oriented activities.


Also, large banks appear to have a distinct, seemingly risky business model. They tend to simultaneously have lower capital (Figure 3), less stable funding (Figure 4), more market-based activities (Figure 5), and be more organisationally complex (Figure 6), than smaller banks.