Brown bag seminar for School of Management staff Monitoring Branches: The effects of flight introductions on bank lending

This lunchtime event led by Dr Linh Nguyen is one in a series of brown bag research seminars for staff in the School of Management.

The series aims to provide opportunities to showcase ongoing research and offer a regular space for colleagues across the School to come together and open up research conversations across the thematic groups and research centres.

In this seminar, the Financial Institutions and Markets group's Dr Nguyen will present his research, ‘Monitoring Branches: The effects of flight introductions on bank lending'.

The work uses the staggered introduction of new flight routes to identify exogenous reductions in travel time between headquarters and bank branches and examine the effects on mortgage lending.

Findings show that reducing headquarters-to-branch travel time increases the number of new mortgages in the branch's county, and these loans exhibit higher ex-post performance. Further analyses suggest that these effects are due to improved local monitoring: monitored loan officers exert more effort in seeking new customers, screening applications, and using more soft information to aid lending decisions.

Overall, the results indicate that proximity enables headquarters to monitor more effectively through lower information acquisition costs.

Dr Nguyen's co-authors were Ivan Lim, Duc Duy Nguyen and John O.S. Wilson.

Further details about the seminar have been circulated to School of Management staff.