Information Technology and Banking Organization

We investigate the impact of information and communication technologies (ICT) on local branch managers’ (LBMs) autonomy in small business lending. Using a unique dataset of nearly 300 Italian banks, we show that banks holding more ICT capital delegate more decision-making power to their LBMs. Eviden...

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Bibliographic Details
Published in:	Journal of financial services research 2017-06, Vol.51 (3), p.313-338
Main Authors:	Mocetti, Sauro, Pagnini, Marcello, Sette, Enrico
Format:	Article
Language:	eng
Subjects:	Autonomy Banking Banking industry Communication technology Community banks Credit unions Decision making Delegation Economics and Finance Finance Financial Services Holding Information technology Macroeconomics/Monetary Economics//Financial Economics Power Small business Small business loans
Online Access:	Get full text
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Summary:	We investigate the impact of information and communication technologies (ICT) on local branch managers’ (LBMs) autonomy in small business lending. Using a unique dataset of nearly 300 Italian banks, we show that banks holding more ICT capital delegate more decision-making power to their LBMs. Evidence from a variety of identification strategies suggests that our results are not driven by unobserved heterogeneity. We also find that the positive effect of ICT on delegation is stronger for banks resorting more to soft information (i.e. those specialized in small business lending and with a longer permanence of LBMs in the same branch).
ISSN:	0920-8550 1573-0735