The papers in this volume were commissioned with the aim of exploring the significant structural changes in the financial system over the past decade or so and the implications for policy-makers charged with the responsibility of maintaining financial system stability

Does the mere presence of big banks affect macroeconomic outcomes? Gabaix (2011) shows that idosyncratic shocks can have aggregate effects if the distribution of firm sizes in manufacturing follows a power law distribution. Our contribution is two-fold. First, we expand the theory of granularity...