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Branch Network Structure and Lending Behaviour

Author

Listed:
  • Tho Pham

    () (School of Management, Swansea University)

  • Oleksandr Talavera

    (School of Management, Swansea University)

  • Andriy Tsapin

    () (National Bank of Ukraine
    National University of Ostroh Academy)

Abstract

This paper examines the link between branch network structure and bank lending. The unique dataset allows us to differentiate the structures of contact points which do not have decision-making authority and delegated branches which can affect loan decisions. We find that a large and dispersed network of contact points can help increase credit supply and mitigate risks through diversification. Further, banks benefit from information advantage brought by the dispersion of delegated branches. However, longer distance between headquarters and local delegations can also amplify agency problems, which outweigh the benefits. Our findings suggest that the optimal structure could be the centralized network of delegated branches combined with the diversified access point network.

Suggested Citation

  • Tho Pham & Oleksandr Talavera & Andriy Tsapin, 2018. "Branch Network Structure and Lending Behaviour," Working Papers 03/2018, National Bank of Ukraine.
  • Handle: RePEc:ukb:wpaper:03/2018
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    File URL: https://bank.gov.ua/doccatalog/document?id=75173997
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    consolidation; centralization; decision-making; risk management; lending; access points; delegated branches;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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