Learning‐by‐lending and learning‐by‐repaying: A two‐sided learning model for defaults on Small Business Administration loans

Drawing on a sample of Small Business Administration (SBA) loans, we develop and test for a two‐sided dynamic learning model to assess the degree of learning‐by‐lending in bank branches and learning‐by‐repaying for borrowers. The results show that learning‐by‐lending is negligible; however, learning‐by‐repaying is small but meaningful, with a shallow learning curve slope of 0.2. The findings have implications for two‐sided learning and for policymakers aiming to lower defaults in SBA loans.