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Loan officers and relationship lending to SMEs

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Author Info
Hirofumi Uchida
Gregory F. Udell
Nobuyoshi Yamori

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Abstract

Previous research suggests that loan officers play a critical role in relationship lending by producing soft information about SMEs. For the first time, we empirically confirm this hypothesis We also examine whether the role of loan officers differs from small to large banks as predicted by Stein (2002). While we find that small banks produce more soft information, the capacity and manner in which loan officers produce soft information does not seem to differ between large and small banks. This suggests that, although large banks may produce more soft information, they likely tend to concentrate their resources on transactions lending.

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Paper provided by Federal Reserve Bank of San Francisco in its series Working Paper Series with number 2008-17.

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Date of creation: 2008
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Handle: RePEc:fip:fedfwp:2008-17

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Keywords: Banks and banking ; Bank loans ; Commercial credit;

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