Abstract
Using a novel dataset of Ukrainian banks, this paper examines the link between the structure of branch network and bank lending. Bank regional branches are categorised into contact points without loan decision-making authority and more independent delegated branches which can make loan decisions. We find that a large and dispersed network of contact points can help increase credit supply and mitigate risks through diversification. Further, banks benefit from the information advantage brought by the presence of delegated branches in local markets. However, the longer distance between headquarters and local delegated branches, the more amplified agency problems become, which outweighs the benefits. Our findings suggest that the optimal structure could be a centralised network of delegated branches combined with a diversified access point network.
| Original language | English |
|---|---|
| Article number | 101040 |
| Journal | Economic Systems |
| Early online date | 8 Sept 2022 |
| DOIs | |
| Publication status | E-pub ahead of print - 8 Sept 2022 |
Bibliographical note
Funding Information:We are grateful to participants of Swansea University Seminar for comments. Any remaining errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bank of Ukraine. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.
Publisher Copyright:
© 2022 Elsevier B.V.
Keywords
- Access points
- Centralisation
- Consolidation
- Decision-making
- Delegated branches
- Lending
ASJC Scopus subject areas
- Economics and Econometrics