Authors: Tho Pham, Oleksandr Talavera, Andriy Tsapin
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
Cite as: Pham, T., Talavera, O., Tsapin, A. (2018). Branch network structure and lending behavior. NBU Working Papers, 3/2018. Kyiv: National Bank of Ukraine. Retrieved from https://bank.gov.ua/admin_uploads/article/wp_nbu_2018-3_Tsapin_eng.pdf