Getting organized to lend in a period of crisis: findings from a survey of Italian banks
AbstractThis paper analyses how banks organize their lending activity by using the results of two surveys carried out in 2006 and in 2009. During this period, the use of rating and scoring methodologies became more widespread even among the smaller banks. Larger banks used these techniques more frequently when pricing their loans, while the importance of ratings in deciding whether to grant a loan in the first place declined. Smaller banks continued to use ratings in a flexible way. In the wake of the crisis banks gave more importance to both hard and soft types of information and increased their guarantee requirements. The trend towards decentralizing decision-making seems to have halted and the average tenure of branch managers has shortened. These managers have mandates that are frequently correlated with the ratings, while pay incentives have not changed substantially. In brief, the 2008-09 recession in some cases contributed to the acceleration of reorganization processes already under way, in others however it altered their direction.
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Questioni di Economia e Finanza (Occasional Papers) with number 154.
Date of creation: Apr 2013
Date of revision:
banking organization; lending techniques; financial crisis;
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
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