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 ma...

The current banking crisis highlights the challenges faced in the traditional lending model, particularly in terms of screening smaller borrowers. The recent growth in online peer-to-peer lending marketplaces offers opportunities to examine different lending models that rely on screening by multiple peers. This paper evaluates the screening ability of lenders in such peer-topeer markets. Our me...

microfinance, banking to the poor, is a recent global phenomenon introduced as a way for combating the poverty in the 1970’s. before that the poor were not allowed access to credit and loans due to the widespread belief that the poor could not repay loans. but microfinance movement with financial innovations reduced the costs and risks of lending to poor households, and presented as tool for re...

This paper reports on a detailed comparison of labour productivity in bank lending to 'middle market' or 'mid-corporate' business customers in Britain, the United States and Germany. It is based on data collected from matched samples of bank lending offices in the three countries. After standardising for average loan size, average lending output per employee-hour in the German sample is found t...

This paper investigates the effect of relationship-lending on loan contract terms, especially on the interest rate, loan value, and collateral requirements. For this purpose, data on 4850 loans granted by a bank in 2016 is employed. Our estimations show a negative and significant relationship between the interest rate and quality and quantity of borrower-lender relationship. Furthermore, there ...

The Community Reinvestment Act (CRA), the Equal Credit Opportunity Act, and the Fair Housing Act all assign a key role to the formal banking sector, based on the view that it is vital for poor and ethnic minority sections of society to have access to banks and other mainstream financial institutions. The usual regulatory view rarely considers alternatives to the formal banking sector, contribut...

In the aftermath of the global financial crisis (2007-2009), policymakers in the developing countries and emerging economies have generally relied on macroprudential policies to achieve financial stability. Since the banking systemchr('39')s vulnerability plays an essential role in financial instability, and the banking systemchr('39')s stability is exposed to vulnerability, we examine macropru...

Credit risk management is an area where regulators expect banks to have transparent and auditable models, which would preclude the use of more accurate black-box models. Furthermore, opaqueness these models may hide unknown biases that lead unfair lending decisions. In this study, we show do not sacrifice prediction accuracy at cost model transparency be compliant with regulatory requirements. ...

An analysis of the characteristics of farm businesses by size of FCS direct lending association suggests that further consolidation of FCS lending should have limited negative impacts on credit availability. Commercial-sized farm businesses with FCS real estate debt appeared similar to those who obtained credit from competing lenders, but smaller associations and those with fewer stockholders p...

Fax +49 69 1344 6000 Telex 411 144 ecb d All rights reserved. Reproduction for educational and non-commercial purposes is permitted provided that the source is acknowledged. 3 Contents Executive summary 5 Introduction 7 1 Banks' margin developments 7 1.1 Main observations 13 1.2 Factors affecting banks' margins 14 1.3 Conclusion of the section 17 2 Reasons for changes in the competitive environ...