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Loan Officers and Relationship Lending to SMEs

Author

Listed:
  • Hirofumi Uchida

    (Wakayama University, Faculty of Economics)

  • Gregory F. Udell

    (Kelly School of Business, Indiana University)

  • Nobuyoshi Yamori

    (Nagoya University, Graduate School of Economics)

Abstract
Previous research suggests that loan officers play a critical role in relationship lending by producing soft information about SMEs. For the first time, we empirically confirm this hypothesis. We also examine whether the role of loan officers differs from small to large banks as predicted by Stein (2002). While we find that small banks produce more soft information, the capacity and manner in which loan officers produce soft information does not seem to differ between large and small banks. This suggests that, although large banks may produce more soft information, they likely tend to concentrate their resources on transactions lending.

Suggested Citation

  • Hirofumi Uchida & Gregory F. Udell & Nobuyoshi Yamori, 2009. "Loan Officers and Relationship Lending to SMEs," Mo.Fi.R. Working Papers 16, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    • Handle: RePEc:anc:wmofir:16
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Relationship lending; Small- and medium-sized enterprises; hierarchical organizations; soft information;
    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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