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

Uluc Aysun

Empirical Economics, 2022, vol. 62, issue 4, No 7, 1687-1714

Abstract: 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.

Keywords: Call report data; Centralized banking; Decentralized banking; Global push (search for similar items in EconPapers)
JEL-codes: E44 G21 G32 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s00181-021-02070-y

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