Decision-Making Delegation in Banks

79 Pages Posted: 23 Apr 2018 Last revised: 8 Jun 2020

See all articles by Jennifer Dlugosz

Jennifer Dlugosz

Board of Governors of the Federal Reserve System

Yong Kyu Gam

Institute of Financial Studies, Southwestern University of Finance and Economics

Radhakrishnan Gopalan

Washington University in St. Louis - John M. Olin Business School

Janis Skrastins

Washington University in St. Louis

Date Written: June 5, 2020

Abstract

Using natural disasters as shocks to local economies, we document that a bank branch’s ability to set deposit rates locally has real effects. Following disasters, branches that set rates locally increase deposit rates more and experience higher deposit volumes in affected counties. Consistent with imperfect insurance from internal capital markets, banks with more branches setting rates locally relatively expand mortgage lending in affected counties. House prices recover faster and consumer bankruptcy filings are reduced in local areas where more branches set rates locally.

Keywords: banks, organizational structure, branch banking

JEL Classification: G20, G21

Suggested Citation

Dlugosz, Jennifer and Gam, Yong Kyu and Gopalan, Radhakrishnan and Skrastins, Janis, Decision-Making Delegation in Banks (June 5, 2020). Available at SSRN: https://ssrn.com/abstract=3155683 or http://dx.doi.org/10.2139/ssrn.3155683

Jennifer Dlugosz (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Yong Kyu Gam

Institute of Financial Studies, Southwestern University of Finance and Economics ( email )

55 Guanghuacun St
Chengdu, Sichuan 610074
China

Radhakrishnan Gopalan

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Janis Skrastins

Washington University in St. Louis ( email )

1 brookings drive
campus box 1133
st louis, MO St Louis 63130
United States

HOME PAGE: http://www.jskrastins.com

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