Financial incentives and loan officer behavior
- 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.
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| Author: | Patrick BehrGND, Alejandro Drexler, Reint GroppGND, André GüttlerGND |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-347879 |
| URL: | http://siteresources.worldbank.org/INTFR/Resources/DrexlerloanofficerincentivesNov5AD.docx |
| Document Type: | Report |
| Language: | English |
| Year of Completion: | 2013 |
| Year of first Publication: | 2013 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2014/11/25 |
| Tag: | incentives; loan officer; loan origination; monitoring; screening |
| Issue: | this version: Nov 5, 2013 |
| Page Number: | 42 |
| HeBIS-PPN: | 351114238 |
| Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Deutsches Urheberrecht |
