Do Local Bank Branches Shape Mortgage Origination?

67 Pages Posted: 23 Jan 2023 Last revised: 11 Feb 2024

See all articles by Janet Gao

Janet Gao

McDonough School of Business

Yufeng Wu

Ohio State University (OSU)

Wang Zhang

University of Illinois at Urbana-Champaign - Department of Finance

Date Written: January 19, 2023


What is the geographic scope of the U.S. mortgage markets? Can local bank branches influence mortgage origination? We seek to answer these questions by investigating the discretion of bank branch managers. For identification, we examine the role of their idiosyncratic experiences with mortgage origination. Using a novel dataset identifying bank branch managers and their career histories, we find that managers' past experiences with mortgage approval and pricing significantly influence their subsequent lending decisions even after they switch employments across firms and locations. These effects are largely driven by non-managerial experiences, suggesting that our results do not purely capture managerial ``styles.'' Our results are stronger for jumbo loans and loans to riskier borrowers, but are weaker in areas with more lenders present and in cases of higher delegation costs. Fixing the manager-branch pair, we observe that mortgage lending outcomes respond strongly (weakly) to monetary policy shocks and bank stress test results when those shocks conform to (contradict) managers' experiences. Overall, our evidence is consistent with local bank branches significantly shaping mortgage origination.

Keywords: bank branch managers, mortgage, delegation, personal experience, monetary policy, bank stress test

JEL Classification: G21, G34, J60, J62

Suggested Citation

Gao, Janet and Wu, Yufeng and Zhang, Wang, Do Local Bank Branches Shape Mortgage Origination? (January 19, 2023). Available at SSRN: or

Janet Gao (Contact Author)

McDonough School of Business ( email )

Washington, DC 20057
United States

Yufeng Wu

Ohio State University (OSU) ( email )

812 Fisher Hall
2100 Neil Ave
Columbus, OH 43210
United States
43210 (Fax)

Wang Zhang

University of Illinois at Urbana-Champaign - Department of Finance ( email )

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