Universal Business Model and Bank Misconduct

Repeated episodes of bank misconduct can threaten financial stability and increase the risk of systemic crises, yet evidence on their drivers remains limited. This paper investigates whether the shift from traditional retail banking towards a universal, fee‐based business model in the United States is associated with greater misconduct. Using a panel of more than 70 US banks, we find that universal banking is positively related to the likelihood of misconduct. These results support structural banking reforms aimed at reducing the complexity of financial conglomerates' business models.