The National bank of Ukraine issues a new working paper, which examines the link between branch network structure and bank lending behavior. The research project “Branch network structure and lending behaviour” co-authorized by Tho Pham, Oleksandr Talavera, and Andriy Tsapin is a joint project that was carried out while Oleksandr Talavera was a Visiting Scholar at the National Bank of Ukraine, supported by the Canada-IMF Technical Assistance Project “NBU Institutional Capacity Building”.

The authors argue that the optimal structure of bank branch network could be a combination of the centralized delegated branches, which can affect loan decisions, and the diversified access points, which do not have decision-making authority. The findings show that a large and dispersed network of access points can help increase credit supply and mitigate risks through diversification. Moreover, banks can 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.

To get more information on this research and NBU Working Papers Series please follow the link.