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Numeracy and the quality of on-the-job decisions: Evidence from loan officers

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  • Brown, Martin
  • Kirschenmann, Karolin
  • Spycher, Thomas

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.

Suggested Citation

  • Brown, Martin & Kirschenmann, Karolin & Spycher, Thomas, 2017. "Numeracy and the quality of on-the-job decisions: Evidence from loan officers," ZEW Discussion Papers 17-026, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:17026
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    References listed on IDEAS

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    More about this item

    Keywords

    behavioral banking; numeracy; loan officers; screening;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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