Advanced Search
MyIDEAS: Login to save this paper or follow this series

Substitution or complementarity between “soft” information and "hard" information : why and which effect on bank profitability ?

Contents:

Author Info

  • Smondel, Aymen
  • Alexandre, Hervé

Abstract

The Basel II committee set up directives encouraging banks to use internal scores in order to assess the risk of their customers. This new form of information competes with the existing ones. SMEs are most concerned by these new stakes, due to the lack of transparency. The aim of this paper is to understand the determinants of the choice between substitution and complementarity between the two types of information: “soft” and “hard”, to test a potential effect of this choice on the banking performance and to describe which variables are involved in the decision-making process. The originality of this work is to try to quantify the information costs and to use it as a variable which is affecting the adopted choice.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://basepub.dauphine.fr/xmlui/bitstream/123456789/5897/1/E5356504d01.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/5897.

as in new window
Length:
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:dau:papers:123456789/5897

Contact details of provider:
Web page: http://www.dauphine.fr/en/welcome.html
More information through EDIRC

Related research

Keywords: Basel directives; Bank-SMEs relationship; bank performance; credit decision-making process; “hard” information; “soft” information;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Jalal Akhavein & W. Scott Frame & Lawrence J. White, 2005. "The Diffusion of Financial Innovations: An Examination of the Adoption of Small Business Credit Scoring by Large Banking Organizations," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 78(2), pages 577-596, March.
  2. Allen N. Berger & Nathan H. Miller & Mitchell A. Petersen & Raghuran G. Rajan & Jeremy C. Stein, 2002. "Does function follow organizational form? evidence from the lending practices of large and small banks," Proceedings, Federal Reserve Bank of Chicago 815, Federal Reserve Bank of Chicago.
  3. Mitchell A. Petersen & Raghuram G. Rajan, 2002. "Does Distance Still Matter? The Information Revolution in Small Business Lending," Journal of Finance, American Finance Association, American Finance Association, vol. 57(6), pages 2533-2570, December.
  4. Berger, Allen N. & Klapper, Leora F. & Martinez Peria, Maria Soledad & Zaidi, Rida, 2006. "Bank ownership type and banking relationships," Policy Research Working Paper Series 3862, The World Bank.
  5. Allen N. Berger & W. Scott Frame & Nathan H. Miller, 2002. "Credit scoring and the availability, price, and risk of small business credit," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2002-26, Board of Governors of the Federal Reserve System (U.S.).
  6. Frame, W Scott & Srinivasan, Aruna & Woosley, Lynn, 2001. "The Effect of Credit Scoring on Small-Business Lending," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 33(3), pages 813-25, August.
  7. Berger, Allen N. & Saunders, Anthony & Scalise, Joseph M. & Udell, Gregory F., 1998. "The effects of bank mergers and acquisitions on small business lending," Journal of Financial Economics, Elsevier, Elsevier, vol. 50(2), pages 187-229, November.
  8. Carter, David A. & McNulty, James E., 2005. "Deregulation, technological change, and the business-lending performance of large and small banks," Journal of Banking & Finance, Elsevier, Elsevier, vol. 29(5), pages 1113-1130, May.
  9. Elyasiani, Elyas & Goldberg, Lawrence G., 2004. "Relationship lending: a survey of the literature," Journal of Economics and Business, Elsevier, Elsevier, vol. 56(4), pages 315-330.
  10. Robert DeYoung & William Hunter & Gregory Udell, 2004. "The Past, Present, and Probable Future for Community Banks," Journal of Financial Services Research, Springer, Springer, vol. 25(2), pages 85-133, April.
  11. Vos, Ed & Yeh, Andy Jia-Yuh & Carter, Sara & Tagg, Stephen, 2007. "The happy story of small business financing," Journal of Banking & Finance, Elsevier, Elsevier, vol. 31(9), pages 2648-2672, September.
  12. Philippe Aghion & Jean Tirole, 1994. "Normal and Real Authority in Organizations," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 94-13, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Jose Maria Liberti, 2004. "Initiative, Incentives and Soft Information. How Does Delegation Impact The Role of Bank Relationship Managers?," Finance, EconWPA 0404023, EconWPA.
  14. Holderness, Clifford G. & Sheehan, Dennis P., 1988. "The role of majority shareholders in publicly held corporations : An exploratory analysis," Journal of Financial Economics, Elsevier, Elsevier, vol. 20(1-2), pages 317-346, January.
  15. Udell, Gregory F., 2008. "What's in a relationship The case of commercial lending," Business Horizons, Elsevier, Elsevier, vol. 51(2), pages 93-103.
  16. Barro, Jason R & Barro, Robert J, 1990. "Pay, Performance, and Turnover of Bank CEOs," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 8(4), pages 448-81, October.
  17. Foglia, A. & Laviola, S. & Marullo Reedtz, P., 1998. "Multiple banking relationships and the fragility of corporate borrowers," Journal of Banking & Finance, Elsevier, Elsevier, vol. 22(10-11), pages 1441-1456, October.
  18. Cole, Rebel A., 1998. "The importance of relationships to the availability of credit," Journal of Banking & Finance, Elsevier, Elsevier, vol. 22(6-8), pages 959-977, August.
  19. Boot, Arnoud W. A., 2000. "Relationship Banking: What Do We Know?," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 9(1), pages 7-25, January.
  20. Lummer, Scott L. & McConnell, John J., 1989. "Further evidence on the bank lending process and the capital-market response to bank loan agreements," Journal of Financial Economics, Elsevier, Elsevier, vol. 25(1), pages 99-122, November.
  21. Berger, Allen N. & Udell, Gregory F., 2006. "A more complete conceptual framework for SME finance," Journal of Banking & Finance, Elsevier, Elsevier, vol. 30(11), pages 2945-2966, November.
  22. Jeremy C. Stein, 2002. "Information Production and Capital Allocation: Decentralized versus Hierarchical Firms," Journal of Finance, American Finance Association, American Finance Association, vol. 57(5), pages 1891-1921, October.
  23. Mitchell A. Petersen & Raghuram G. Rajan, 1994. "The Effect of Credit Market Competition on Lending Relationships," NBER Working Papers 4921, National Bureau of Economic Research, Inc.
  24. Elsas, Ralf, 2005. "Empirical determinants of relationship lending," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 14(1), pages 32-57, January.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:dau:papers:123456789/5897. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alexandre Faure).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.