How organizational hierarchy affects information production

Skrastins, J and Vig, V (2019) How organizational hierarchy affects information production. The Review of Financial Studies, 32 (2). pp. 564-604. ISSN 0893-9454

Abstract

We exploit a variation in organizational hierarchy induced by a reorganization plan implemented in roughly 2,000 bank branches in India. We do so to investigate how organizational hierarchy affects the allocation of credit. We find that increased hierarchization of a branch induces credit rationing, reduces loan performance, and generates standardization in loan contracts. Additionally, we find that hierarchical structures perform better in environments characterized by a high degree of corruption, highlighting the benefits of hierarchies in restraining rent-seeking activities. Overall, our results are consistent with the view that valuable information may be lost in hierarchical structures.

More Details

Item Type: Article
Subject Areas: Finance
Subjects: B > Banks
M > Microfinance
M > Mortgages
O > Organisational behaviour
Date Deposited: 30 May 2019 10:40
Last Modified: 02 Sep 2019 15:35
URI: http://lbsresearch.london.edu/id/eprint/993
More

Export and Share


Download

Full text not available from this repository.

Statistics

Altmetrics
View details on Dimensions' website

Downloads from LBS Research Online

View details

Actions (login required)

Edit Item Edit Item