Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers

• 成果类型: Article
• 署名作者: Cole, Shawn; Kanz, Martin; Klapper, Leora
• 署名单位: Harvard University; National Bureau of Economic Research; The World Bank
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12233
• 发表日期: 2015
• 页码: 537-575
• 关键词: information; ECONOMICS; booms

摘要

We conduct an experiment with commercial bank loan officers to test how performance compensation affects risk assessment and lending. High-powered incentives lead to greater screening effort and more profitable lending decisions. This effect is muted, however, by deferred compensation and limited liability, two standard features of loan officer compensation contracts. We find that career concerns and personality traits affect loan officer behavior, but show that the response to incentives does not vary with traits such as risk-aversion, optimism, or overconfidence. Finally, we present evidence that incentives distort the assessment of credit risk, even among professionals with many years of experience.