Incentivizing Calculated Risk-Taking : Evidence from an Experiment with Commercial Bank Loan Officers

Cole, Shawn ; Kanz, Martin ; Klapper, Leora

World Bank, Washington, DC

关键词: ACCOUNTABILITY;    AGENCY PROBLEM;    AGENCY PROBLEMS;    APPROVAL PROCESS;    ASSET PRICES;   

DOI  :  10.1596/1813-9450-6146
RP-ID  :  WPS6146

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper uses a series of experimentswith commercial bank loan officers to test the effect ofperformance incentives on risk-assessment and lendingdecisions. The paper first shows that, while high-poweredincentives lead to greater screening effort and moreprofitable lending, their power is muted by both deferredcompensation and the limited liability typically enjoyed byloan officers. Second, the paper presents direct evidencethat incentive contracts distort judgment and beliefs, evenamong trained professionals with many years of experience.Loans evaluated under more permissive incentive schemes arerated significantly less risky than the same loans evaluatedunder pay-for-performance.