Question A:
The four largest domestic US banks currently have around 40% of the industry’s domestic assets (an average of 10% each). In early 1998, before Glass-Steagall ended and before Citicorp merged with Travelers, they held 13.2% (an average of 3.3% each). Thirty years ago, before interstate branching was fully permitted, that combined share was around 8% (an average of 2% each).
Capping US banks’ size so that no single bank could be larger than 4% of the sector's domestic assets would lower systemic risk in the US.
Responses
© 2025. Kent A. Clark Center for Global Markets.
24%
0%
0%
12%
31%
33%
0%
Responses weighted by each expert's confidence
© 2025. Kent A. Clark Center for Global Markets.
0%
12%
39%
50%
0%
Question B:
The US financial system would contribute more to the average American's welfare if the size of US banks were capped so that none could be larger than 4% of the sector's domestic assets.
Responses
© 2025. Kent A. Clark Center for Global Markets.
24%
2%
0%
17%
38%
19%
0%
Responses weighted by each expert's confidence
© 2025. Kent A. Clark Center for Global Markets.
0%
27%
48%
25%
0%
Question A Participant Responses
Participant |
University |
Vote |
Confidence |
Bio/Vote History |
|---|---|---|---|---|
 Daron Acemoglu |
MIT | Bio/Vote History | ||
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Political connections and systemic effects of risktaking make concentration in finance likely more pernicious than elsewhere. 4% a ?
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 Alberto Alesina |
Harvard | Did Not Answer | Bio/Vote History | |
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 Joseph Altonji |
Yale | Did Not Answer | Bio/Vote History | |
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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 Katherine Baicker |
University of Chicago | Did Not Answer | Bio/Vote History | |
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 Abhijit Banerjee |
MIT | Bio/Vote History | ||
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Trouble makersLehman & Bear Stearns were smaller banks. On the other hand, smaller banks are easier to dissolve & less political influence.
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 Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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Complicated: size is only one factor.
-see background information here |
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 David Cutler |
Harvard | Bio/Vote History | ||
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 Angus Deaton |
Princeton | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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But it's not smart. Banning financial firms also lowers fiinancial systemic risk, but does not serve economic welfare. Use capital regs.
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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"Too big to manage" can be a problem. Not the only problem of course. Small banks can also fail, threatening financial stability.
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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 Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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 Austan Goolsbee |
Chicago | Bio/Vote History | ||
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depends how you did it but size alone isn't what's dangerous-it's interconnectedness. And you can't ignore non-bank financial institutions.
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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too many other factors matter such that question is challenging to answer confidently, e.g., what about capital holding requirements?
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 Robert Hall |
Stanford | Bio/Vote History | ||
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Systemic risk arises when speedy resolution of insolvency does not occur. With proper non-bailout resolution, big banks are fine.
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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With banks being smaller no single bank's failure would lead to serious contagion or undermine the confidence of investors and depositors.
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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 Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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My worry is that most banks pursue similar business strategies. Many banks doing risky things is no safer than a few banks doing the same.
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Very hard and difficult question. Cannot say much without a lot more information.
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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shadow banking risks would grow substantially if we go this route and we already saw that they were at the heart of the last crisis
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 Pete Klenow |
Stanford | Bio/Vote History | ||
 Jonathan Levin |
Stanford | Bio/Vote History | ||
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 Eric Maskin |
Harvard | Bio/Vote History | ||
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Having more and smaller banks would probably increase diversification
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 William Nordhaus |
Yale | Bio/Vote History | ||
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No evidence in favor. Unclear how to do without collateral damage it other than current approach of graduated capital requirements.
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 Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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Other alternatives, such as appropriately regulating reserves and leverage, would also be effective.
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 José Scheinkman |
Columbia University | Did Not Answer | Bio/Vote History | |
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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The shadow banking system, which is important in this context, would change in response to such a rule, with unknown effects.
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 Carl Shapiro |
Berkeley | Did Not Answer | Bio/Vote History | |
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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 Christopher Udry |
Northwestern | Did Not Answer | Bio/Vote History | |
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Question B Participant Responses
Participant |
University |
Vote |
Confidence |
Bio/Vote History |
|---|---|---|---|---|
|
Daron Acemoglu |
MIT | Bio/Vote History | ||
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Against the benefits of lower systemic risk there is the loss of business to other financial centers. Global regulation would be better.
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Alberto Alesina |
Harvard | Did Not Answer | Bio/Vote History | |
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Joseph Altonji |
Yale | Did Not Answer | Bio/Vote History | |
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Katherine Baicker |
University of Chicago | Did Not Answer | Bio/Vote History | |
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Technology will lead to a reshaping of the financial industry. Some aspect will have scale advantages, others not.
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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There are clearly some countervailing benefits to size.
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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A 4% cap might be OK for now, but too low later, causing distortions. Require instead higher minimum capital ratios for larger banks.
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Size alone confers no benefits to consumers and arguably is one source of costs (those associated with financial instability).
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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Austan Goolsbee |
Chicago | Bio/Vote History | ||
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Without dealing with shadow banks, this rule alone would mostly drive consumers to non-banks outside the rules.
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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we are missing decisive evidence on whether benefits of large banks exceed their costs
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Robert Hall |
Stanford | Bio/Vote History | ||
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see A
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Oliver Hart |
Harvard | Bio/Vote History | ||
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There are benefits of large banks as well as costs. Regulation should include shadow banks and be more flexible than a cap on size.
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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I have antitrust concerns. If a bank's 4% is concentrated in one region, then it may have excessive market power.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Banks are large in other countries, suggesting size is a net positive. On the other hand, size was a problem in the financial crisis.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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I think there are probably some economies of scale that consumers benefit from, but hard to know how much would be lost from downsizing.
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
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There are benefits of bigness that would be lost by breaking up banks. Limiting leverage is a more effective tool
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William Nordhaus |
Yale | Bio/Vote History | ||
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Same as above.
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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José Scheinkman |
Columbia University | Did Not Answer | Bio/Vote History | |
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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There would be somewhat more intense competition, which would be beneficial, but there would also be other difficult-to-evaluate effects.
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Carl Shapiro |
Berkeley | Did Not Answer | Bio/Vote History | |
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Did Not Answer | Bio/Vote History | |
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