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Centralized versus decentralized drivers of subsidiary lending: evidence from US Call Reports

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  • Uluc Aysun

    (University of Central Florida)

Abstract

This paper demonstrates that the financial conditions of US subsidiaries, and not those of their owners, have been the primary drivers of their lending since the mid-1990s. This evidence is obtained by using a large number of bank-level observations from US Call Reports. The ownership structure inferred from these data allows for a unique identification strategy that determines the independent effects of subsidiary-specific and owner-specific financial conditions on subsidiaries’ lending. The results show that subsidiaries’ financial conditions were, in general, more important for lending decisions than those of their owners in the past two decades. Considering a broad set of factors with systematic effects on financial markets, the paper also finds that these so-called push factors influence subsidiaries’ lending mainly through their own financial conditions and not those of their owners.

Suggested Citation

  • Uluc Aysun, 2022. "Centralized versus decentralized drivers of subsidiary lending: evidence from US Call Reports," Empirical Economics, Springer, vol. 62(4), pages 1687-1714, April.
    • Handle: RePEc:spr:empeco:v:62:y:2022:i:4:d:10.1007_s00181-021-02070-y
    DOI: 10.1007/s00181-021-02070-y
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    More about this item

    Keywords

    Call report data; Centralized banking; Decentralized banking; Global push;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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