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Centralized versus Decentralized Banking: Bank-level evidence from U.S. Call Reports

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  • Uluc Aysun

    (University of Central Florida, Orlando, FL)

Abstract

This paper demonstrates that decentralized banking has been the primary model of banking in the US since the mid-90s. This evidence is obtained by using a large number of bank-level observations from US Call Reports. The ownership structure that I infer from these data allow me to use a unique identification strategy to determine the independent effects of subsidiary-specific and owner-specific financial conditions (decentralized and centralized effects, respectively) on subsidiaries’ lending. The results show that subsidiaries financial conditions were, in general, more important for lending decisions than those of its owners. In other words, decentralized banking is more pronounced than centralized banking. Considering a broad set of factors that have a systematic effect on financial markets, I also find that the effects of these push factors on subsidiary lending mainly feed through the financial conditions of the subsidiaries and not their owners.

Suggested Citation

  • Uluc Aysun, 2019. "Centralized versus Decentralized Banking: Bank-level evidence from U.S. Call Reports," Working Papers 2019-03, University of Central Florida, Department of Economics.
    • Handle: RePEc:cfl:wpaper:2019-03ua
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    More about this item

    Keywords

    Call report data; centralized banking; decentralized banking; global push;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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