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Fear, Anger and Credit. On Bank Robberies and Loan Conditions

Author

Listed:
  • Paola Morales Acevedo

    (Tilburg University - Center for Economic Research (CentER); Tilburg University - European Banking Center)

  • Steven Ongena

    (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR))

Abstract

We study the impact of emotions on real-world decisions made by loan officers by analyzing the loan conditions of loans granted immediately after a bank branch robbery. We find significant differences between the conditions of loans granted after a robbery and changes in loan conditions that occur contemporaneously at unaffected branches. In general, loan officers seem to adopt so-called avoidance behavior. In accordance with the literature on posttraumatic stress, their avoidance behavior is halved within two weeks following the robbery and the effect further varies depending on the presence, or absence, of a firearm during the robbery.

Suggested Citation

  • Paola Morales Acevedo & Steven Ongena, 2019. "Fear, Anger and Credit. On Bank Robberies and Loan Conditions," Swiss Finance Institute Research Paper Series 19-42, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1942
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    Cited by:

    1. Lucas A. Mariani & Jose Renato Haas Ornelas & Bernardo Ricca, 2023. "Banks’ Physical Footprint and Financial Technology Adoption," Working Papers Series 576, Central Bank of Brazil, Research Department.
    2. Bhattacharya, Debarati & Cheng, Tzu-Chang Forrest & Chuang, Meng-Ju & Li, Wei-Hsien & Wang, Zi-Peng, 2024. "Terrorism-Induced Trauma and Corporate Innovation," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    3. Bertrand, Jérémie & Burietz, Aurore, 2023. "(Loan) price and (loan officer) prejudice," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 26-42.
    4. Mariani, Lucas A. & Haas Ornelas, José Renato & Ricca, Bernardo, 2023. "Banks’ Physical Footprint and Financial Technology Adoption," IDB Publications (Working Papers) 12812, Inter-American Development Bank.

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    More about this item

    Keywords

    behavioural finance; bank robberies; transactional versus relationship lending;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G2 - Financial Economics - - Financial Institutions and Services

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