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Working Paper

Multibank Holding Company Organizational Structure and Performance

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Over the past decade, several researchers have suggested thatmultibank holding company organizational structure will systematically influence the performance of subsidiary banks. Specifically, these researchers have hypothesized that the magnitude of affiliation benefits generated by a particular holding company will be positively related to the degree to which control over subsidiary bank decisions and operations is centralized in the hands of the parent corporation.To date, this possibility has been ignored in the empirical studies exploring holding company affiliation impacts, perhaps biasing their results. To obtain insight on this issue, quantitative measures of the organizational centralization of 62 multibank holding companies, derived from survey data, were related to summary measures of holding company profitability. A positive, significant relationship was discovered between these centralization indexes and holding company profitability.
03.01.1982ISSN 2573-7953 WP 82-01

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Whalen, Gary. 1982. “Multibank Holding Company Organizational Structure and Performance.” Federal Reserve Bank of Cleveland, Working Paper No. 82-01.