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Loan officers and relationship lending to SMEs

Author

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  • Hirofumi Uchida
  • Gregory F. Udell
  • Nobuyoshi Yamori

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.

Suggested Citation

  • Hirofumi Uchida & Gregory F. Udell & Nobuyoshi Yamori, 2008. "Loan officers and relationship lending to SMEs," Working Paper Series 2008-17, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfwp:2008-17
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    More about this item

    Keywords

    Banks and banking; Bank loans; Commercial credit;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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