The Incentive Effect of Scores: Randomized Evidence from Credit Committees
In: NBER Working Paper No. w19303
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In: NBER Working Paper No. w19303
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In: Journal of Finance, Forthcoming
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In: American economic review, Band 107, Heft 2, S. 457-492
ISSN: 1944-7981
We present evidence that cultural proximity (shared codes, beliefs, ethnicity) between lenders and borrowers increases the quantity of credit and reduces default. We identify in-group lending using dyadic data on religion and caste for officers and borrowers from an Indian bank, and a rotation policy that induces exogenous matching between them. Having an in-group officer increases credit access and loan size dispersion, reduces collateral requirements, and induces better repayment even after the in-group officer leaves. We consider a range of explanations and suggest that the findings are most easily explained by cultural proximity serving to mitigate information frictions in lending. (JEL D82, D83, G21, G28, O16, Z12, Z13)
In: CEPR Discussion Paper No. DP12156
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Working paper
In: NBER Working Paper No. w21800
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In: NBER Working Paper No. w16063
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Working paper
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In: Journal of Finance, Band 66, Heft 2, S. 379-412
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In: Journal of Finance, Band 65, Heft 3, S. 795-828
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In: NBER Working Paper No. w16975
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