Abstract
Using exogenous shocks to the relationship between borrowers and loan-officers, we document that borrowers are less likely to receive new loans from the bank and are more likely to apply for credit from other banks when their original loan officers are absent. They also are more likely to miss payments or go into default. These effects are more pronounced when turnovers are unexpected as in the case of sickness leaves or when officers do not have strong incentives to transfer information, e.g. terminated loan officers. However, when given the right situation, e.g. voluntary resignations of loan officers, it seems possible to transfer soft information between employees within the same institution.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
