TITLE:
Cross-Country Differences in How Behavioral Biases Affect Decision-Making in the Bank Industry: Evidence from Italy and Serbia
AUTHORS:
Mario Mustilli, Rossana Piccolo, Eugenio D’Angelo
KEYWORDS:
Banks, Behavioral Biases, Italy, Serbia
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.8 No.2,
February
12,
2018
ABSTRACT: Since non-performing loans, despite the
implementation of the Basel accords, which should have improved
creditworthiness estimation, are strongly affecting European banks’ liquidity
and stability, there could be a behavioral bias behind banks misallocation of
capital. The purpose of this study is to investigate whether behavioral biases
affect credit allocation in different ways in different countries.
Particularly, we investigated how certain characteristics of the applicants,
such as race, age, gender and education, affect bank officers’ decision-making
process. The study was conducted submitting face-to-face questionnaires to 299
officers, 212 in Italy and 87 in Serbia, working in the credit chain. Running a
Mann-Whitney U test on the mentioned two independent samples, result show that
Italian officers are more influenced by behavioral biases than their Serbian
colleagues when they have to decide whether or not to approve a loan
application.