The great banking divide: the impact of size on bank funding structures

We examine how bank size influences deposit funding strategies since the turn of the century. We reveal a pronounced shift toward higher deposit-to-asset ratios in large banks, contrasting with the traditional reliance on deposits by smaller banks. Our analysis uncovers an inverted U-shaped relationship between wholesale funding ratios and bank size, with mid-sized banks showing a marked propensity for accessing wholesale funding. This article provides a comparative common size balance sheet for banks from 2000 to 2022, offering critical insights for banking sector stakeholders and policymakers.