U.S. Banks Have Developed a Significant Nonbank Footprint

Nicola Cetorelli and Saketh Prazad ()

No 20251118a, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In light of the rapid growth of nonbank financial institutions (NBFIs), many have argued that bank-led financial intermediation is on the decline, based on the traditional notion that banks operate to take in deposits and make loans. However, we argue that deposit-taking and loan-making have not accurately characterized U.S. banking operations in recent decades. Instead, as we propose in this post, absent regulatory restrictions, banks naturally expand their boundaries to include NBFI subsidiaries. A significant component of the growth of NBFIs has in fact taken place inside the boundaries of banking firms.

Keywords: banking firm; bank holding companies; firm boundaries; nonbank financial institutions (search for similar items in EconPapers)
JEL-codes: G01 G21 G23 G28 (search for similar items in EconPapers)
Date: 2025-11-18
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:102118

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DOI: 10.59576/lse.20251118a

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