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Decision-Making Delegation in Banks

Author

Listed:
  • Jennifer Dlugosz

    (Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, District of Columbia 20551)

  • Yong Kyu Gam

    (School of Business, University College Dublin, D04 C1P1 Dublin, Ireland)

  • Radhakrishnan Gopalan

    (Olin Business School, Washington University in St. Louis, St. Louis, Missouri 63130)

  • Janis Skrastins

    (Olin Business School, Washington University in St. Louis, St. Louis, Missouri 63130)

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 with rates set 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 in local areas where more branches’ rates are set locally.

Suggested Citation

  • Jennifer Dlugosz & Yong Kyu Gam & Radhakrishnan Gopalan & Janis Skrastins, 2024. "Decision-Making Delegation in Banks," Management Science, INFORMS, vol. 70(5), pages 3281-3301, May.
    • Handle: RePEc:inm:ormnsc:v:70:y:2024:i:5:p:3281-3301
    DOI: 10.1287/mnsc.2023.4856
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    References listed on IDEAS

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    Cited by:

    1. Anikeev, K., 2026. "Deposit channel of monetary policy transmission: The impact of uniform and local pricing strategies," Journal of the New Economic Association, New Economic Association, vol. 70(1), pages 262-278.
    2. Michael Iselin & Allison Nicoletti & Jacob Ott & Haiwen Helen Zhang, 2025. "Regulatory leniency and the cost of deposits," Review of Accounting Studies, Springer, vol. 30(4), pages 3641-3676, December.
    3. Robert M. Feinberg, 2025. "Local Credit Union Competition and Bank Deposit Rates: The Role of Covid-19," Journal of Industry, Competition and Trade, Springer, vol. 25(1), pages 1-11, December.
    4. Vinzenz Peters, 2025. "How Banks are Impacted by and Mediate the Economic Consequences of Natural Disasters and Climate Shocks: A Review," De Economist, Springer, vol. 173(1), pages 47-85, March.

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