Loan origination under soft- and hard-information lending : [Version: August 2008]

  • This paper presents a novel model of the lending process that takes into account that loan officers must spend time and effort to originate new loans. Besides generating predictions on loan officers’ compensation and its interaction with the loan review process, the model sheds light on why competition could lead to excessively low lending standards. We also show how more intense competition may fasten the adoption of credit scoring. More generally, hard-information lending techniques such as credit scoring allow to give loan officers high-powered incentives without compromising the integrity and quality of the loan approval process. The model is finally applied to study the implications of loan sales on the adopted lending process and lending standard.

Download full text files

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Author:Roman InderstORCiDGND
Parent Title (German):Working paper series / Institute for Monetary and Financial Stability ; 27
Series (Serial Number):Working paper series / Institute for Monetary and Financial Stability (27)
Document Type:Working Paper
Year of Completion:2009
Year of first Publication:2009
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2009/12/08
GND Keyword:Kreditwürdigkeitsprüfung; Sachbearbeiter; Bank
Issue:Version: August 2008
August 2008 (First version: February 2007)
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Institute for Monetary and Financial Stability (IMFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht