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Numeracy and the quality of on-the-job decisions: Evidence from loan officers

Martin Brown (), Karolin Kirschenmann and Thomas Spycher

No 17-026, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We examine how the numeracy level of employees influences the quality of their on-the-job decisions. Based on an administrative dataset of a retail bank we relate the performance of loan officers in a standardized math test to the accuracy of their credit assessments of small business borrowers. We find that loan officers with a high level of numeracy are more accurate in assessing the credit risk of borrowers. The effect is most pronounced during the pre-crisis credit boom period when it is arguably more difficult to pick out risky borrowers.

Keywords: behavioral banking; numeracy; loan officers; screening (search for similar items in EconPapers)
JEL-codes: G21 J24 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ban and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:17026

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