Complexity and bank risk during the financial crisis

- We construct a novel dataset to analyze the evolution of banks' complexity.
- We evaluate how complexity measures relate to bank stability during crisis times.
- The sample covers stock listed banks in the Euro area from 2007 to 2014.
- Bank stability is significantly affected by our complexity measures.
- However, the direction of the effect differs across the complexity measures.

We construct a novel dataset to measure banks' complexity and relate it to banks' riskiness. The sample covers stock listed Euro area banks from 2007 to 2014. Bank stability is significantly affected by complexity, whereas the direction of the effect differs across complexity measures.