Deciding to lend: Minimizing risk, producing trust, and managing organizational forces in United States credit markets.

摘要

In this dissertation, I ask how creditors decide to lend money. This decision is the key moment of interaction within the distribution of credit in the formal economy, yet we do not have a good understanding of how lenders decide who deserves credit. My project provides that understanding. To this end, I conducted interviews with creditors in 33 organizations in New York, New Jersey, and Pennsylvania. I found that creditors rely on a blend of formal risk assessment tools and informal character evaluation techniques to discern whom among their applicants should be offered credit. I also found that distinct organizational contexts orient individual decision makers toward different goals through explicit organizational missions and by affecting the extent to which final decisions are collaborative. Beyond the organizational context, I also found that some macro level forces influence how decision makers work. External pressures from competition and regulation motivate an unexpected level of coordination among bankers and community and economic developers. This coordination has the unintended consequence of creating increasing convergence among community and economic development credit programs toward more bank-like processing, which is shaping the future of that credit field. For borrowers, the credit process has some key cultural effects. Creditors of all types engage in a variety of disciplining techniques. These techniques include financial training and counseling, loan term negotiation, and application denial. Creditors use these techniques to help reduce the uncertainty of credit transactions by creating better borrowers among their applicants, particularly among the high-risk misbehaving kind.