Firm structure, size, and crisis response in bank holding companies

Abstract

We examine how organizational structure affected internal liquidity mobilization during the Global Financial Crisis using quarterly data on U.S. bank holding companies (BHCs) from 2006 to 2010. The analysis addresses endogeneity using instrumental variables and pre-crisis measurement of organizational structure. Nonbank subsidiaries became an important liquidity source during the crisis, but this effect weakened among the largest BHCs unless they had high organizational complexity. High-complexity BHCs maintained effectiveness at large scale, with advantages concentrated when rapid response is most valuable (early crisis) and when managing many subsidiaries. These timing and subsidiary-count patterns distinguish coordination capacity from alternative mechanisms such as information advantages or regulatory optimization. The findings suggest supervisors should assess organizational coordination capacity alongside size-based metrics when evaluating crisis preparedness.