We study a controlled corporate experiment in which loan officers were compensated to engage in loan prospecting in addition to the traditional loan screening. Loan prospecting led to larger loan sizes (+15%) and higher origination rates (+31%) while keeping the traditional credit quality threshold and interest rate intact. Loan officers attempt to influence the decision making process: loan officers report better opinions for loans with moderate approval probability based on their fundamentals. Furthermore, approval decisions rely heavier on loan officers’ opinions, especially for more established loan officers.
SEP172014
From Loan Screening to Loan Prospecting
Amsterdam TI Finance Research Seminars
- Speaker(s)
- Itzhak Ben David (Ohio State University, United States)
- Date
- Wednesday, 17 September 2014
- Location
- Amsterdam