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Right and wrong lending decisions: are they predictable?

Author

Listed:
  • Paola Brighi

    (Università di Bologna)

  • Caterina Lucarelli

    (Università Politecnica delle Marche)

  • Valeria Venturelli

    (Università di Modena e Reggio Emilia)

Abstract

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

Suggested Citation

  • Paola Brighi & Caterina Lucarelli & Valeria Venturelli, 2017. "Right and wrong lending decisions: are they predictable?," BANCARIA, Bancaria Editrice, vol. 3, pages 24-41, March.
    • Handle: RePEc:ban:bancar:v:03:y:2017:m:march:p:24-41
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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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