Numeracy and the Quality of On-the-Job Decisions: Evidence from Loan Officers

Item Type Journal paper
Abstract

We examine how the numeracy level of employees influences the quality of their on-the-job decisions. Based on an administrative dataset of a retail bank we relate the performance of loan officers in a standardized math test to the accuracy of their credit assessments of small business borrowers. We find that loan officers with a high level of numeracy are more accurate in assessing the credit risk of borrowers. The effect is most pronounced during the pre-crisis credit boom period when it is arguably more difficult to pick out risky borrowers.

Authors Brown, Martin; Kirschenmann, Karolin & Spycher, Thomas
Journal or Publication Title Economic Inquiry
Language English
Keywords behavioral banking, numeracy, loan officers, screening
Subjects business studies
economics
finance
HSG Classification contribution to scientific community
HSG Profile Area SOF - System-wide Risk in the Financial System
Refereed Yes
Date April 2020
Publisher Wiley Online Library
Volume Volume 58
Number Issue 2
Page Range 998-1022
Number of Pages 25
Publisher DOI https://doi.org/10.1111/ecin.12873
Official URL https://onlinelibrary.wiley.com/doi/full/10.1111/e...
Contact Email Address martin.brown@unisg.ch
Depositing User Beatrix Kobelt-Glock
Date Deposited 10 Jul 2017 10:35
Last Modified 21 May 2020 00:30
URI: https://www.alexandria.unisg.ch/publications/251196

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Citation

Brown, Martin; Kirschenmann, Karolin & Spycher, Thomas (2020) Numeracy and the Quality of On-the-Job Decisions: Evidence from Loan Officers. Economic Inquiry, Volume 58 (Issue 2). 998-1022.

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https://www.alexandria.unisg.ch/id/eprint/251196
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