Decision-Making Delegation in Banks

81 Pages Posted: 23 Apr 2018  

Jennifer Dlugosz

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

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: April 3, 2018

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 expand mortgage lending relatively more in affected counties. House prices recover faster in MSAs that have more branches setting rates locally. Our results are robust to instrumenting for the location of deposit rate-setting authority using bank mergers.

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 (April 3, 2018). Available at SSRN: https://ssrn.com/abstract=3155683 or http://dx.doi.org/10.2139/ssrn.3155683

Jennifer Dlugosz (Contact Author)

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

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