Title : The Impact of Organizational and Incentive Structures on Soft Information : Evidence from Bank Lending
In 2002 and 2003, many Chinese banks implemented policy reforms that delegated lending decisions to individuals following China’s entrance into the WTO. With this plausibly exogenous shock and detailed loan-level data from a large, state-owned bank, we find that an internal risk
assessment measure (‘soft’ information) has a more pronounced effect, relative to publicly available information (‘hard’ information), on both pricing and nonpricing terms of loan contracts after the reform. When the cost of producing soft information is higher, proxied by the distance
between the bank branch and borrower, or when the loan approval decision is made at the branch above which the risk assessment is made, the weight of this risk measure on loan contracts shifts toward hard information. In these cases it also becomes a poorer predictor of loan performance. Our results highlight how organizational structure and incentives can affect the production and quality of soft information.
JEL Classifications: G2, L2, D8.
Keywords: Soft information, hierarchy, bank loan, interest rate, default.
학회소식
학회소식
[2010년 제 4차] The Impact of Organizational and Incentive Structur
작성자 : 관리자
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게시일 :
2010-12-09