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

32 Pages Posted: 14 May 2020

See all articles by Paola Morales

Paola Morales

Central Bank of Colombia

Steven Ongena

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

Date Written: April 2020

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 2 weeks following the robbery and the effect further varies depending on the presence, or absence, of a firearm during the robbery.

JEL Classification: G02, G2

Suggested Citation

Morales, Paola and Ongena, Steven R. G., Fear, Anger, and Credit. On Bank Robberies and Loan Conditions (April 2020). Economic Inquiry, Vol. 58, Issue 2, pp. 921-952, 2020, Available at SSRN: https://ssrn.com/abstract=3596424 or http://dx.doi.org/10.1111/ecin.12826

Paola Morales (Contact Author)

Central Bank of Colombia ( email )

Carrera 7 No. 14-78 Piso 11
Bogotá
Colombia

Steven R. G. Ongena

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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