Loan Officer Authority and Small Business Lending: Evidence from a Survey

Banks, Local Credit Markets and Credit Supply Conference, p. 175, 2010

17 Pages Posted: 4 Aug 2012

Multiple version iconThere are 2 versions of this paper

Date Written: March 24, 2010

Abstract

Using a unique dataset based on the Bank of Italy’s organizational survey, we find that – after having controlled for bank size – loan officers’ authority has a key role in explaining bank specialization in small business lending. In particular, banks that delegate more decision-making power to their loan officers are more willing to lend to small firms than other banks. We use several proxies for measuring loan officers’ authority: loan officers’ discretion in loan approval and in setting interest rates, the amount of money up to which they are allowed to lend autonomously, their turnover, their compensation schemes, and the kind of information (soft versus hard information) used both for screening and monitoring purposes.

Keywords: Bank organization, Small business lending, Loan officer authority

JEL Classification: G21, L15, L22

Suggested Citation

Benvenuti, Michele and Del Prete, Silvia and Casolaro, Luca and Mistrulli, Paolo Emilio, Loan Officer Authority and Small Business Lending: Evidence from a Survey (March 24, 2010). Banks, Local Credit Markets and Credit Supply Conference, p. 175, 2010. Available at SSRN: https://ssrn.com/abstract=2123321 or http://dx.doi.org/10.2139/ssrn.2123321

Michele Benvenuti (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Silvia Del Prete

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Luca Casolaro

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Paolo Emilio Mistrulli

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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