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Prestigious stock exchanges: a network analysis of international financial centers
Peristiani, Stavros; Cetorelli, Nicola (2009-08-01)
In this paper, we use methods from social network analysis to assess the relative importance of financial centers around the world. Using data from virtually the entire universe of global equity activity, we present two sets of complete rankings for up to forty-five separate locations for the 1990-2006 period. The first phase of our analysis evaluates international stock exchanges based on their ability to attract global initial public offerings (IPOs). The second phase compares the capacity of these exchanges to provide an efficient trading platform for cross-listed companies. U.S. exchanges ...
Staff Reports , Paper 384

Discussion Paper
Global Banks and Their Internal Capital Markets during the Crisis
Cetorelli, Nicola; Goldberg, Linda S. (2011-07-11)
As financial markets have become increasingly globalized, banks have developed growing networks of branches and subsidiaries in foreign countries. This expansion of banking across borders is changing the way banks manage their balance sheets, and the ways home markets and foreign markets respond to disturbances to financial markets. Based on our recent research, this post shows how global banks used their foreign affiliates for accessing scarce dollars during the financial crisis—a liquidity strategy that helped transmit shocks internationally while reducing some of the consequences in the ...
Liberty Street Economics , Paper 20110711

Journal Article
Trends in financial market concentration and their implications for market stability
Peristiani, Stavros; Cetorelli, Nicola; Morgan, Donald P.; Hirtle, Beverly; Santos, Joao A. C. (2007-03)
The link between financial market concentration and stability is a topic of great interest to policymakers and other market participants. Are concentrated markets - those where a relatively small number of firms hold large market shares - inherently more prone to disruption? This article considers that question by drawing on academic studies as well as introducing new analysis. Like other researchers, the authors find an ambiguous relationship between concentration and instability when a large firm in a concentrated market fails. In a complementary review of concentration trends across a ...
Economic Policy Review , Volume 13 , Issue Mar , Pages 33-51

Report
Monetary Policy, Investor Flows, and Loan Fund Fragility
Santos, João A. C.; Cetorelli, Nicola; La Spada, Gabriele (2022-03-01)
We show that monetary policy shocks have a positive effect on flows in bank-loan mutual funds. This relationship, however, is asymmetric: positive shocks cause small inflows, whereas negative shocks cause large outflows. Further, the effect of monetary policy shocks is stronger when short-term rates are higher. Finally, we document that large outflows from loan funds lead to significant declines in loan-level prices in the secondary leveraged loan market. Our results identify a novel channel of monetary policy transmission that not only affects a critical segment of the credit sector, but ...
Staff Reports , Paper 1008

Working Paper
Finance as a barrier to entry: bank competition and industry structure in local U.S. markets
Strahan, Philip E.; Cetorelli, Nicola (2004)
This paper tests how competition in local U.S. banking markets affects the market structure of non- financial sectors. Theory offers competing hypotheses about how competition ought to influence firm entry and access to bank credit by mature firms. Using data on U.S. local markets for banking and non-financial sectors, we find that more vigorous banking competition ? that is, lower concentration and looser restrictions on geographical expansion -- is associated with more firms in operation and with a smaller average firm size. In fact, the whole firm-size distribution shifts toward the origin ...
Working Paper Series , Paper WP-04-04

Report
Coexistence of Banks and Non-Banks: Intermediation Functions and Strategies
Cetorelli, Nicola; Cisternas, Gonzalo; Sarkar, Asani (2025-03-01)
What is the essence of non-bank financial intermediation? How does it emerge and interact with intermediation performed by banks? To investigate these questions, we develop a model-based survey: we classify existing models into different intermediation functions á la Merton (1995) to show that variations of them admit a common modeling structure; then, we extend or reinterpret the resulting models to connect equilibrium strategies to non-bank activities in practice. Particular emphasis is placed on the coexistence of banks and non-banks: how their competition, or the extent of cooperation ...
Staff Reports , Paper 1145

Discussion Paper
Capitalizing on Nonbanks: Regulatory Arbitrage Within Bank Holding Companies
Kundu, Shohini; Cetorelli, Nicola (2026-07-15)
When economists and policymakers talk about nonbank finance, they usually have in mind activity that takes place outside the banking system in institutions that compete with banks for the provision of financial intermediation services, such as fintech lenders, money market funds, private credit vehicles, insurers, and broker-dealers. A substantial share of U.S. nonbank financial activity, however, takes place inside bank holding companies (BHCs), conducted by nonbank subsidiaries that operate alongside regulated commercial banks under common ownership and integrated management. In this first ...
Liberty Street Economics , Paper 20260715

Discussion Paper
New Report Assesses Structural Changes in Global Banking
Dages, B. Gerard; Cetorelli, Nicola; Taber, Afshin; Licari, Paul (2018-02-02)
The Committee on the Global Financial System, made up of senior officials from central banks around the world and chaired by New York Fed President William Dudley, recently released a report on ?Structural Changes in Banking after the Crisis.? The report includes findings from a wide-ranging study documenting the significant structural adjustments in banking systems around the world in response to regulatory, technological, and market changes after the crisis, while also assessing their implications for financial stability, credit provision, and capital markets activity. It includes a new ...
Liberty Street Economics , Paper 20180202

Journal Article
The evolution of banks and financial intermediation: framing the analysis
Mandel, Benjamin H.; Cetorelli, Nicola; Mollineaux, Lindsay (2012-07)
This is the introduction to a volume which explores the changing role of banks in the financial intermediation process. It accompanies a Liberty Street Blog series. Both discuss the complexity of the credit intermediation chain associated with securitization and note the growing participation of nonbank entities within it. These series also discuss implications for monitoring and rulemaking going forward. In the introduction, Nicola Cetorelli introduces the series and provides a preview of the topics covered. Additionally, he lays out the overarching theme of the volume?the fact that banks ...
Economic Policy Review , Volume 18 , Issue Jul , Pages 1-12

Report
Transformed Intermediation: Credit Risk to NBFIs, Liquidity Risk to Banks
Acharya, Viral V.; Cetorelli, Nicola; Tuckman, Bruce (2026-01-01)
We argue that the rapid asset growth of nonbank financial intermediaries (NBFIs) relative to banks is the outcome of transformations of risks between banks and NBFIs that increase the interconnectedness of the two sectors. These transformations are consistent with avoiding tighter, post-GFC bank regulation while harnessing the funding and liquidity advantages of bank deposit franchises and access to safety nets. Specifically, we show that banks fund NBFIs through senior loans and credit lines, which NBFIs use for acquiring junior credit claims, warehouse financing, and liquidity management. ...
Staff Reports , Paper 1176

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