Standardization in Bank Lending: Institutional, Organizational, and Financial Issues (I Processi Di Standardizzazione Della Funzione Creditizia Degli Intermediari Bancari: Aspetti Istituzionali, Organizzativi E Finanziari)

Abstract

This paper aims to point out how standardization and financial innovation are putting under pressure the traditional economics of banking.

It is argued that the progressive standardization and information technology innovation, with special reference to internal rating systems, risk management techniques, and regulatory constraints, have been leading bank lending toward new business models. The increasing role of internal ratings, credit scorings, and hard information in the banking intermediation process have enlarged the organizational and strategic differences between transaction-based banking and relationship-based banking. The structure of this paper is as follows. Section 1 outlines the general context of the study. Section 2 considers the standardization process in the credit assessment phase. Section 3 considers the impact of standardization on the organizational structure of banking firms, credit operations of banks, and bank business models. Section 4 concludes.

Keywords: standardization, lending, rating, bank, risk management, financial innovation

JEL Classification: G20, G21, M10, M20, M21