Credit Relationships: Evidence from Experiments with Real Bankers

Simon Cornée, David Masclet () and Gervais Thenet

Journal of Money, Credit and Banking, 2012, vol. 44, issue 5, 957-980

Abstract: We experimentally examine to what extent long‐term “lender–borrower” relationships mitigate moral hazard. The originality of our research lies in recruiting not only students but also commercial and social bankers. The opportunity to engage in bilateral long‐term relationships mitigates the repayment problem. Lenders take advantage of their long‐term situation by increasing their rates. Consequently, borrowers are incited to take more risk. Improving information disclosure ameliorates the repayment but does not incite lenders to offer more credits. Social bankers exhibit a higher probability of granting a loan and make fairer credit offers to borrowers than the other subject pools do.

Date: 2012
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https://doi.org/10.1111/j.1538-4616.2012.00517.x

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Journal Article: Credit Relationships: Evidence from Experiments with Real Bankers (2012)
Working Paper: Credit Relationships: Evidence from Experiments with Real Bankers (2012)
Working Paper: Credit relationships: evidence from experiments with real bankers (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:44:y:2012:i:5:p:957-980

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