Do Relationships Matter? Evidence from Loan Officer Turnover

Alejandro Drexler () and Antoinette Schoar ()
Additional contact information
Antoinette Schoar: Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139; National Bureau of Economic Research, Cambridge, Massachusetts 02138; and ideas42, New York, New York 10004

Management Science, 2014, vol. 60, issue 11, 2722-2736

Abstract: We show that the cost of employee turnover in firms that rely on decentralized knowledge and personal relationships depends on the firms' planning horizons and the departing employees' incentives to transfer information. Using exogenous shocks to the relationship between borrowers and loan officers, we document that borrowers whose loan officers are on leave are less likely to receive new loans from the bank, are more likely to apply for credit from other banks, and are more likely to miss payments or go into default. These costs are smaller when turnover is expected, as in the case of maternity leave, or when loan officers have incentives to transfer information, as in the case of voluntary resignations. This paper was accepted by Wei Jiang, finance .

Keywords: information; incentives; corporate finance; banking; intermediation; organizational studies; performance (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2014.1957 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:60:y:2014:i:11:p:2722-2736

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().