IMFS Working Paper on the credit decisions of banks

In his new Working Paper, IMFS Visiting Scholar Vikrant Vig examines the relationship between lending practices of a large multinational bank, its organizational design and the quantity of information available regarding borrowers.

By exploiting micro-data of a large Argentinean bank due to an expansion of a credit registry for a subset of its borrowers, Vig and his co-authors José María Liberti (DePaul University and Northwestern University) and Amit Seru (University of Chicago) come to the conclusion that additional information about borrowers leads to an improvement in the efficiency of credit allocation decisions. This increases the bank’s profitability. The patterns investigated in the paper refer to the framework of incentive-based as well as information cost processing theories.

IMFS Working Paper No. 97
José María Liberti, Amit Seru, Vikrant Vig
"Information, Credit, Organization"
(PDF, 1,01 MB)