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Loan officers and relationship lending to SMEs

Author

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  • Uchida, Hirofumi
  • Udell, Gregory F.
  • Yamori, Nobuyoshi

Abstract

Previous research suggests that loan officers may play a critical role in relationship lending by producing soft information about SMEs. For the first time, we analyze this hypothesis and find empirical evidence that indicates that loan officer activities are associated with bank production of soft information. We also find that loan officers at small banks produce more soft information than at large banks, but large banks appear to have the equivalent potential to underwrite relationship loans. Nevertheless, large banks choose instead to focus their resources on transactions lending.

Suggested Citation

  • Uchida, Hirofumi & Udell, Gregory F. & Yamori, Nobuyoshi, 2012. "Loan officers and relationship lending to SMEs," Journal of Financial Intermediation, Elsevier, vol. 21(1), pages 97-122.
    • Handle: RePEc:eee:jfinin:v:21:y:2012:i:1:p:97-122
    DOI: 10.1016/j.jfi.2011.06.002
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    More about this item

    Keywords

    Relationship lending; Small- and medium-sized enterprises; Soft information; Hierarchical organizations;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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