Refine
Year of publication
- 2013 (1)
Document Type
- Report (1) (remove)
Language
- English (1) (remove)
Has Fulltext
- yes (1)
Is part of the Bibliography
- no (1)
Keywords
- loan origination (1) (remove)
Institute
In this paper, we investigate the implications of providing loan officers with a compensation structure that rewards loan volume and penalizes poor performance. We study detailed transactional information of more than 45,000 loans issued by 240 loan officers of a large commercial bank in Europe. We find that when the performance of their portfolio deteriorates, loan officers shift their efforts towards monitoring poorly-performing borrowers and issue fewer loans. However, these new loans are of above-average quality, which suggests that loan officers have a pecking order and process loans only for the very best clients when they are under time constraints.