Table 17 Open in new tab Loan size...

		VW defaults	VW ROL	“Quasi” R2
Branch level	0.013***	−0.008***	−0.035***
	(0.003)	(0.004)	(0.008)
\|${\rm Before}^{-2}$\|				0.006
				(0.011)
\|${\rm Before}^{0}$\|				−0.009
				(0.012)
\|${\rm After}^{2}$\|				−0.022*
				(0.013)
\|${\rm After}^{4+}$\|				−0.047***
				(0.010)
Observations	54,079	54,079	54,079	54,079
Adj-\|$R^{2}$\|	0.18	0.13	0.11	0.11
Branch FEs	Y	Y	Y	Y
Quarter FEs	Y	Y	Y	Y

VW defaults

VW ROL

“Quasi” R2

(1)

(2)

(3)

(4)

Branch level

0.013***

−0.008***

−0.035***

(0.003)

(0.004)

(0.008)

|${\rm Before}^{-2}$|

0.006

(0.011)

|${\rm Before}^{0}$|

−0.009

(0.012)

|${\rm After}^{2}$|

−0.022*

(0.013)

|${\rm After}^{4+}$|

−0.047***

(0.010)

Observations

54,079

Adj-|$R^{2}$|

0.18

0.13

0.11

Branch FEs

Quarter FEs

		VW defaults	VW ROL	“Quasi” R2
Branch level	0.013***	−0.008***	−0.035***
	(0.003)	(0.004)	(0.008)
\|${\rm Before}^{-2}$\|				0.006
				(0.011)
\|${\rm Before}^{0}$\|				−0.009
				(0.012)
\|${\rm After}^{2}$\|				−0.022*
				(0.013)
\|${\rm After}^{4+}$\|				−0.047***
				(0.010)
Observations	54,079	54,079	54,079	54,079
Adj-\|$R^{2}$\|	0.18	0.13	0.11	0.11
Branch FEs	Y	Y	Y	Y
Quarter FEs	Y	Y	Y	Y

Table 17

Open in new tab

Loan size manipulation around the approval limit

		VW defaults	VW ROL	“Quasi” R2
	(1)	(2)	(3)	(4)
Branch level	0.013***	−0.008***	−0.035***
	(0.003)	(0.004)	(0.008)
\|${\rm Before}^{-2}$\|				0.006
				(0.011)
\|${\rm Before}^{0}$\|				−0.009
				(0.012)
\|${\rm After}^{2}$\|				−0.022*
				(0.013)
\|${\rm After}^{4+}$\|				−0.047***
				(0.010)
Observations	54,079	54,079	54,079	54,079
Adj-\|$R^{2}$\|	0.18	0.13	0.11	0.11
Branch FEs	Y	Y	Y	Y
Quarter FEs	Y	Y	Y	Y

		VW defaults	VW ROL	“Quasi” R2
	(1)	(2)	(3)	(4)
Branch level	0.013***	−0.008***	−0.035***
	(0.003)	(0.004)	(0.008)
\|${\rm Before}^{-2}$\|				0.006
				(0.011)
\|${\rm Before}^{0}$\|				−0.009
				(0.012)
\|${\rm After}^{2}$\|				−0.022*
				(0.013)
\|${\rm After}^{4+}$\|				−0.047***
				(0.010)
Observations	54,079	54,079	54,079	54,079
Adj-\|$R^{2}$\|	0.18	0.13	0.11	0.11
Branch FEs	Y	Y	Y	Y
Quarter FEs	Y	Y	Y	Y

In this table, we report the effect of the organizational hierarchy for the loans well below the loan approval limit of the head of the branch. We redefine the approval limit as 80% of the true threshold. We report the effect on the value-weighted defaults (Column 1) and return on loans (Column 2), and the contract standardization (“quasi” R-squared, Columns 3 and 4). The unit of analysis is a branch-quarter. The measure of contract standardization is estimated as the standard deviation of the residuals obtained from the regression model defined in Equation (5). The defaults are measured as whether a loan is over 60 days late 1-year forward. The return on loans is measured like in Equation (2). The variable Branch Level is a number between 1 and 3, where the lowest value (level 1) and the highest value (level 3) characterize the least hierarchical branches and the most hierarchical branches, respectively. |$\mbox{Before}^{-2}$| is a dummy variable that equals 1 (⁠|$-1$|⁠) if the branch was upgraded (downgraded) in one or two quarters. |$\mbox{Before}^{0}$| is a dummy variable that equals 1 (⁠|$-1$|⁠) if the branch was upgraded this quarter or one quarter ago. |$\mbox{After}^{2}$| is a dummy variable that equals 1 (⁠|$-1$|⁠) if the branch was upgraded (downgraded) two or three quarters ago. |$\mbox{After}^{4+}$| is a dummy variable that equals 1 (⁠|$-1$|⁠) if the branch was upgraded (downgraded) four quarters ago or more. The standard errors are reported in parentheses and clustered at the branch level. * significant at 10%; ** significant at 5%; and *** significant at 1%.

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