Summary of Do Big Banks Have Lower Operating Costs?

Economic Policy Review. Special Issue: Large and Complex Banks

Federal Reserve Bank of New York,

Get the Report

Do Big Banks Have Lower Operating Costs? summary
Are bigger banks more efficient banks?


8 Overall

8 Importance

8 Innovation

7 Style


In an era of systemically important financial institutions, some US banks are now “too big to fail” and perhaps “too big to jail.” The debate continues as to whether the largest banks enjoy unfair competitive and cost advantages relative to their smaller brethren, especially due to market perceptions of a government guarantee. Federal Reserve Bank of New York researchers Anna Kovner, James Vickery and Lily Zhou find that constraining bank size could result in unintended higher costs for the economy and consumers. getAbstract recommends this illuminating paper to financial institution executives, policy makers and analysts for its insights into the pluses and minuses of big banking.

In this summary, you will learn

  • What cost efficiencies big US banks enjoy
  • How large banks’ expenses differ from those of smaller banks
  • Why limiting bank size may incur significant economic costs


Judging from the 2008 financial crisis, US banks deemed “too big to fail” could jeopardize the stability of the financial system. Some commentators have suggested limiting the size of banks by capping their assets relative to GDP or by imposing incremental fees on assets above a given threshold. While...
Get the key points from this report in less than 10 minutes. Learn more about our products or log in

About the Authors

Anna Kovner is a research officer at the Federal Reserve Bank of New York, where James Vickery is a senior economist and Lily Zhou is a senior research analyst.

Comment on this summary

More on this topic

By the same authors

Customers who read this summary also read

More by category