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. 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).