On the role of loan officers’ psychological traits in predicting microcredit default accuracy

Purpose - – The present paper’s aim lies in providing an empirical analysis of whether the loan officers’ psychological traits display an explanation of their subjective prediction accuracy. Design/methodology/approach - – A qualitative and qualitative analysis has also been applied. Findings - – The reached results reveal that, with respect to microfinance institutions, the loan officers’ accurate subjective judgment crucially relies on the principle of learning-through-experience so as to construct a special type of relevant skills and competences. Learning is both an intellectual and an emotional process, whereby loan officers acquire certain specific experience likely to enhance their cognitive skills and shape their emotional intelligence, which would, in turn, sharpen their forecasting accuracy. In fact, the higher emotional intelligence is, the easier it makes it for loan officer to adjust or reduce their judgmental errors and make a more effective application of the pertinent heuristics. Conversely, however, the lack or absence of emotions and feelings of novice loan officer is likely to hinder and inhibit the cognitive as well as the learning processes. Originality/value - – The paper considers the role of individual psychological traits on the decisions of experienced and inexperienced individuals when deciding on the default risk in the context of loan decisions. Learning is both an intellectual and an emotional process, whereby loan officers acquire certain specific experience likely to enhance their cognitive skills and shape their emotional intelligence, which would, in turn, sharpen their forecasting accuracy.