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Better safe than sorry: Defensive loan assessment behaviour in a changing bank environment
Mid Sweden University, Faculty of Human Sciences, Department of Social Sciences.
Mid Sweden University, Faculty of Human Sciences, Department of Social Sciences.ORCID iD: 0000-0001-5731-0489
2012 (English)In: Qualitative Research in Accounting & Management/Emerald, ISSN 1176-6093, E-ISSN 1758-7654, Vol. 9, no 2, p. 146-167Article in journal (Refereed) Published
Abstract [en]

Purpose - The purpose of this paper is to examine to what extent and in what forms loan applications from small and medium-sized enterprises (SMEs) in a risk averse banking environment can be assessed defensively by lending officers (LOs). The paper also identifies triggering mechanisms behind defensive SME loan assessment behaviour and its' possible effects on the bank and the LOs. Design/methodology/approach - The paper relies on a case study of a major Swedish commercial bank undergoing strategy and control system change during the recent financial crisis. The empirical evidence was collected through interviews with 76 LOs in three branch offices and a focus group interview session. Findings - In a risk averse banking environment, LOs can be prone to assessing SME loan applications defensively to a noteworthy extent. Such defensiveness comes in different forms: denial of loan applications, granting of loans with collateral or high interest rates, or granting of loans only to clients with most of their financial affairs in the bank. External and internal mechanisms jointly trigger defensive loan assessment behaviour. The possible effects include fewer Type II errors and more Type I errors for the bank, while LOs avoid change and blame. Originality/value - Overall, this study contributes to the literature by revealing triggering mechanisms, forms and effects related to the multifaceted construct of defensive loan assessment behaviour among LOs in a commercial bank, who handle applications from SMEs.

Place, publisher, year, edition, pages
2012. Vol. 9, no 2, p. 146-167
Keywords [en]
Banking; Defensive behaviour; Effects; Lending officers; Lending services; Loan assessment; Loans; Sweden; Triggering mechanisms
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:miun:diva-17732DOI: 10.1108/11766091211240360Scopus ID: 2-s2.0-84873184773OAI: oai:DiVA.org:miun-17732DiVA, id: diva2:577267
Available from: 2012-12-14 Created: 2012-12-14 Last updated: 2017-12-06Bibliographically approved

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Nilsson, AndersÖhman, Peter

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