Centralized versus Decentralized Banking: Bank-level evidence from U.S. Call Reports
Uluc Aysun ()
No 2019-03, Working Papers from University of Central Florida, Department of Economics
This paper demonstrates that decentralized banking has been the primary model of banking in the US since the mid-90s. This evidence is obtained by using a large number of bank-level observations from US Call Reports. The ownership structure that I infer from these data allow me to use a unique identification strategy to determine the independent effects of subsidiary-specific and owner-specific financial conditions (decentralized and centralized effects, respectively) on subsidiaries’ lending. The results show that subsidiaries financial conditions were, in general, more important for lending decisions than those of its owners. In other words, decentralized banking is more pronounced than centralized banking. Considering a broad set of factors that have a systematic effect on financial markets, I also find that the effects of these push factors on subsidiary lending mainly feed through the financial conditions of the subsidiaries and not their owners.
Keywords: Call report data; centralized banking; decentralized banking; global push (search for similar items in EconPapers)
JEL-codes: E44 F32 G15 G21 (search for similar items in EconPapers)
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