Title: The use of multidimensional information in credit decisions: a study from the inside of a successful bank

Authors: Gunnar Wahlström

Addresses: School of Business, Economics and Law, Gothenburg Research Institute, University of Gothenburg, Viktoriagatan 13, Box 603, SE 405 30 Gothenburg, Sweden

Abstract: This study explores credit decisions in a bank that, according to Standard and Poor, is one of the largest in the world in terms of assets and that Moody's has described as one of the least likely banks in the world to default. This study reveals that local credit officers, who were geographically close to their customers, had great freedom in credit decisions, regardless of the size of the loan. Larger credit decisions must be confirmed by headquarters. Once confirmed, the local officer handles the credit further. Freedom for local credit officers worked as a device to motivate to work beyond the formal system of risk measurement, and to seek complex information in their face-to-face meetings with customers. The described approach to credit decisions was set by strict control through the use of numbers, as top management could step in if middle managers or local credit officers were incompetent.

Keywords: bank; credit decisions; management control; risk measurement; freedom in decision.

DOI: 10.1504/IJEA.2022.124133

International Journal of Economics and Accounting, 2022 Vol.11 No.2, pp.135 - 154

Received: 04 Sep 2020
Accepted: 21 Mar 2021
Published online: 14 Jul 2022 *

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