When the going gets tough, the tough get going

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dc.contributor.authorFredriksson, A.
dc.contributor.authorMaresch, D.
dc.contributor.authorFink, M.
dc.contributor.authorMoro, Andrea
dc.date.accessioned2017-03-02T10:05:14Z
dc.date.available2017-03-02T10:05:14Z
dc.date.issued2017-02-28
dc.description.abstractA bank’s lending decision is affected by the amount of information it can access and by its capability to manage this information. The latter aspect implies that the bank has to decide whether borrowers should be managed in a local branch of the bank or in its headquarters. By looking at a sample of Finnish banks, the present research investigates a bank’s capability to extract profitability from both locally and centrally managed firms. We find that banks are able to properly discriminate between firms: those which should be managed by loan managers with expert knowledge in the bank’s headquarters due to their complexity, and those firms which should be managed in the bank’s local branch because they are simpler and need standard products and services. As a result, banks are able to extract risk-adjusted profitability (RAP) from both centrally and locally managed customers. Our findings clearly support the argument that the decision to centralise or decentralise the lending decision process is not an either/or decision: banks should implement both approaches and apply according to the type of firm they serve.en_UK
dc.identifier.citationFredriksson, Antti; Maresch, Daniela; Fink, Matthias; and Moro, Andrea (2017) When the going gets tough, the tough get going, The Journal of Entrepreneurial Finance: Vol. 19: Iss. 1, article number 3en_UK
dc.identifier.issn2373-1761
dc.identifier.urihttp://digitalcommons.pepperdine.edu/jef/vol19/iss1/3/
dc.identifier.urihttp://dspace.lib.cranfield.ac.uk/handle/1826/11536
dc.language.isoenen_UK
dc.publisherPepperdine University, Graziado School of Business and Managementen_UK
dc.subjectSmall Firmsen_UK
dc.subjectLocal Banksen_UK
dc.subjectTransaction Lendingen_UK
dc.subjectRelationship Lending Risk- Adjusted Profitabilityen_UK
dc.titleWhen the going gets tough, the tough get goingen_UK
dc.typeArticleen_UK

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