Journal of
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Archive » March 2017 » Right and wrong lending decisions: are they predictable?

Right and wrong lending decisions: are they predictable?

Paola Brighi, Caterina Lucarelli, Valeria Venturelli
March 2017 - n. 3
Jel codes: G21, L25, O16

Using a proprietary database of lending decisions for small and medium-sized enterprises (Smes), the aim of the paper is to understand how hard and soft information affect the correctness as well as the probability of errors within the loan decisions for a sample of cooperative banks (Cbs). The two types of information play a complementary role in defining the bank loan final decision. Hard information appear more consistent in conditioning the correctness of loans decisions as well as to avoid errors. On the contrary, the relationship lending information generates different results over time and across space. In this sense, according to different scenarios, a lending relationship-based technology may generate both correct and wrong loan’s decisions.

 

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