TITLE:
Is the Lending Decision-Making Process Affected by Behavioral Biases? —Evidence from Southern Italy
AUTHORS:
Eugenio D’Angelo, Mario Mustilli, Rossana Piccolo
KEYWORDS:
Behavioral Biases, Banks, Non-Financial Firms, Decision-Making
JOURNAL NAME:
Modern Economy,
Vol.9 No.1,
January
18,
2018
ABSTRACT: The objective of this article was to verify whether,
in the decision-making process concerning bank loans issuance, managers have
been influenced or not by how they perceive some personal characteristics of
the applicant, even if these characteristics have nothing to do with the
financial aspects typically analyzed to determine creditworthiness. In
particular, we analyzed the impact of gender, age, beauty, race and education
of the borrower on the probability to be funded. The study was conducted submitting face-to-face questionnaires
to 212 officers working in the credit chain of 25 banks and data have been
analyzed using the logistic regression model. The chosen setting was the south
of Italy and in particular of the Campania region. The results show that there
has been some influence of bias regarding gender, age and beauty, while no
significant relationship has been found with reference to the racial
discrimination or to the cultural level of the applicant. These results, which
confirm the evidence already found in other settings by previous empirical
analyses, would lead to highlight that there is an adverse selection mechanism in the provision of banks'
credit capital.