The Organization of Lending and the Use of Credit Scoring Techniques in Italian Banks: Results of a Sample Survey

Albareto, Giorgio; Benvenuti, Michele; Mocetti, Sauro; Pagnini, Marcello; Rossi, Paola

doi:10.2139/ssrn.2120725

Cited by 16 publications

(24 citation statements)

References 26 publications

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“…Moreover, having controlled for bank size and other legal and institutional characteristics, our findings on the impact of organizational variables on bank lending corroborate and extend those in Albareto et al (2011). While they found a substantial heterogeneity in bank organization that goes beyond that of the traditional dichotomy between large and small sized banks, we show that this heterogeneity does matter for bank strategies and performance in a crucial time span as that represented by the recent economic crisis.…”

Section: Random Effects Modelsupporting

confidence: 87%

“…Credit scoring and rating techniques are now largely adopted among banks (Berger, Cowan and Frame, 2011;Albareto et al, 2011). Furthermore, before the financial crisis large banks improved their competitive position in small business lending by using scoring techniques based on 'hard' information (de la Torre, Martínez Pería and Schmukler, 2008;Berger and Black, 2011).…”

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confidence: 99%

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Lending Organization and Credit Supply During the 2008-09 Crisis

et al. 2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractUsing a unique dataset, which combines bank organizational variables, information on lending techniques, firms' credit demand and others balance sheet indicators, we investigate the impact of lending organization on credit dynamics during the crisis period. Our main findings suggest that the variables shaping the organization of a bank in its lending activity to non financial firms have a complex impact on its ability to expand credit. Banks that heavily resort to credit scoring techniques actually reduced their credit expansion during the economic downturn. At the same time, banks that delegate more power to their local branch managers (LBM) were likely to expand loans at a higher rate. Finally, contrary to the evidence referred to the pre-crisis period, we find that a longer tenure of the LBM in the same branch is detrimental for the credit growth rate. These finding are robust to a wide set of robustness checks. JEL Classification: G21, L15

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Section: Random Effects Modelsupporting

confidence: 87%

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confidence: 99%

Lending Organization and Credit Supply During the 2008-09 Crisis

et al. 2017

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“…40 As introduced in the previous sections, we include fixed effects for the type of the firm as a determinant of the posted prices. 41 Following the survey of Albareto et al (2011), these types are constructed as the combination of the firm's sector (primary, secondary, tertiary), size (sales 36 First stage estimates are reported in Appendix B. 37 OLS and IV second stage estimates are reported in Appendix B.…”

Section: Resultsmentioning

confidence: 99%

“…37 OLS and IV second stage estimates are reported in Appendix B. 38 Albareto et al (2011) describe the importance of firms' size in the organization of lending in the Italian banking sector. 39 Petersen and Rajan (1995) use the amount of trade credit as a key variable to determine if borrowers are credit constrained, as it's typically a more expensive form of credit than banks' credit lines.…”

Section: Resultsmentioning

confidence: 99%

“…Following the work by Albareto, Benvenuti, Mocetti, Pagnini and Rossi (2011) on the determinants of interest rates decisions, these types are defined by the amount of credit granted, the firm's sector, the firm's size in terms of sales, and the observable riskiness of the firm defined by the SCORE. 22 There two main reasons why we make this simplifying assumption.…”

Section: The Modelmentioning

confidence: 99%

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Asymmetric Information and Imperfect Competition in Lending Markets

2015

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We measure the consequences of asymmetric information and imperfect competition in the Italian lending market. We show that banks' optimal price response to an increase in adverse selection varies with competition. Exploiting matched data on loans and defaults, we estimate models of demand for credit, loan use, pricing, and firm default. We find evidence of adverse selection and evaluate its importance. While indeed prices rise in competitive markets and decline in concentrated ones, the former effect dominates, suggesting that while market power can mitigate the adverse effects of asymmetric information, mainstream concerns about its effects survive with imperfect competition. * We thank

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