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Learning‐by‐lending and learning‐by‐repaying: A two‐sided learning model for defaults on Small Business Administration loans

Pankaj C. Patel and Mike G. Tsionas

Managerial and Decision Economics, 2022, vol. 43, issue 4, 906-919

Abstract: Drawing on a sample of Small Business Administration (SBA) loans, we develop and test for a two‐sided dynamic learning model to assess the degree of learning‐by‐lending in bank branches and learning‐by‐repaying for borrowers. The results show that learning‐by‐lending is negligible; however, learning‐by‐repaying is small but meaningful, with a shallow learning curve slope of 0.2. The findings have implications for two‐sided learning and for policymakers aiming to lower defaults in SBA loans.

Date: 2022
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