Can Centralization Improve the Use of Soft Information? Evidence from a Field Study and Lab Experiment

52 Pages Posted: 16 Aug 2016 Last revised: 21 Aug 2021

See all articles by Jan Bouwens

Jan Bouwens

Amsterdam Business School

Ties de Kok

University of Washington - Michael G. Foster School of Business

Date Written: August 1, 2021

Abstract

This paper studies whether increasing supervision impairs a loan officer's motivation to produce and share information. We first exploit an organizational change at a large European bank and find that centralization improves the use of soft information in evaluating the creditworthiness of small-to-medium size loan applicants. Next, we conduct a lab experiment and find that participants are more likely to accept an increase in supervision when it is motivated by changes in the external environment of the organization. Taken together, our study informs financial institutions, regulators, and academics on the potential benefits of centralization and provides insights on how to achieve employee acceptance when introducing a new supervision policy.

Suggested Citation

Bouwens, Jan and de Kok, Ties, Can Centralization Improve the Use of Soft Information? Evidence from a Field Study and Lab Experiment (August 1, 2021). Available at SSRN: https://ssrn.com/abstract=2823253 or http://dx.doi.org/10.2139/ssrn.2823253

Jan Bouwens

Amsterdam Business School ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 5258740 (Phone)

Ties De Kok (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

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