Loan Officer Confidence, Continuous Reporting, And The Loan Approval Process

摘要

This study explores the issue of loan officers' confidence in making loan approval decisions across different loan monitoring types. Loan officers were asked to assign loan approval probabilities given a traditional loan monitoring capability or a continuous reporting capability. We find that the higher the level of confidence the loan officer had in his/her loan approval decision, the higher the loan approval probability assigned to the loan application. However, that effect was not consistent across monitoring types (traditional vs. continuous reporting). Our results suggest that loan officer confidence only impacts the loan approval probabilities for the traditional monitoring cases. Confidence did not significantly influence loan approval probabilities for the continuous reporting cases; although, the loan approval probabilities for the continuous reporting, low confidence cases exceeded 50 percent.