The Determinants and the Effect of Soft Information 'Loss' in Bank Lending.

23 Pages Posted: 22 Jun 2017

See all articles by Gabriele Sampagnaro

Gabriele Sampagnaro

University of Naples Parthenope

Claudio Porzio

University of Naples Parthenope

Vincenzo Verdoliva

University of Naples "Parthenope"

Date Written: June 21, 2017

Abstract

In this paper, we examine who holds the decision-making power for credit approval in small business lending and the determinants of shifting this power from a local branch to an upper organizational level. Since soft information is usually collected by local branches, shifting the decision-making power may lead to a loss of soft information because it is difficult to transmit soft information across organizational levels. We discover that when the local bank operates with a relationship lending strategy, it tends to handle loan requests, and soft information loss is less likely to occur. Furthermore, we observe that the organizational level at which loan requests are handled has a significant effect on the approval/rejection of a loan request.

Keywords: credit rationing, soft information

JEL Classification: G13

Suggested Citation

Sampagnaro, Gabriele and Porzio, Claudio and Verdoliva, Vincenzo, The Determinants and the Effect of Soft Information 'Loss' in Bank Lending. (June 21, 2017). Available at SSRN: https://ssrn.com/abstract=2990396 or http://dx.doi.org/10.2139/ssrn.2990396

Gabriele Sampagnaro (Contact Author)

University of Naples Parthenope ( email )

Via Ammiraglio Ferdinando Acton, 38
Via Generale Parisi, 13
Naples, 80133
Italy

Claudio Porzio

University of Naples Parthenope ( email )

Via Ammiraglio Ferdinando Acton, 38
Via Generale Parisi, 13
Naples, 80133
Italy

Vincenzo Verdoliva

University of Naples "Parthenope" ( email )

Via generale parisi
Naples, Naples 80133
Italy

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