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The Impact of Organizational Structure and Lending Technology on Banking CompetitionHans DegryseKU Leuven - Faculty of Business and Economics (FBE); Centre for Economic Policy Research (CEPR); CentER, European Banking Center (EBC), TILEC, Tilburg University Luc LaevenInternational Monetary Fund (IMF); Centre for Economic Policy Research (CEPR) Steven OngenaTilburg University - CentER, European Banking Center (EBC); Centre for Economic Policy Research (CEPR) April 2009 Review of Finance, Vol. 13, Issue 2, pp. 225-259, 2009 Abstract: We investigate how bank organization shapes banking competition. We show that a bank's geographical lending reach and loan pricing strategy is determined by its own and its rivals’ organizational structure. We estimate the impact of organization on the geographical reach and loan pricing of a large bank. We find that the reach of the bank is smaller when rival banks are large and hierarchically organized, have superior communication technology, have a narrower span of organization, and are closer to a decision unit with lending authority. Rival banks’ size and the number of layers to a decision unit soften spatial pricing.
Keywords: G21, L11, L14 Accepted Paper SeriesDate posted: April 21, 2009Suggested CitationContact Information
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