Do Relationships Matter? Evidence from Loan Officer Turnover
Name
Schoar_Do relationships matter.pdf
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155.74 KB
Format
Adobe PDF
Checksum (MD5)
596a711c0d3fa2af5a3f7338edf7aa72
Author(s)
Drexler, Alejandro
Schoar, Antoinette
Date Issued
August 2014
Journal
Management Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Citation
Drexler, Alejandro, and Antoinette Schoar. “Do Relationships Matter? Evidence from Loan Officer Turnover.” Management Science (August 2014).
Version
Author's final manuscript
Abstract
We show that the cost of employee turnover in firms that rely on decentralized knowledge and personal relationships depends on the firms' planning horizons and the departing employees' incentives to transfer information. Using exogenous shocks to the relationship between borrowers and loan officers, we document that borrowers whose loan officers are on leave are less likely to receive new loans from the bank, are more likely to apply for credit from other banks, and are more likely to miss payments or go into default. These costs are smaller when turnover is expected, as in the case of maternity leave, or when loan officers have incentives to transfer information, as in the case of voluntary resignations.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
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DOI of Published Version
https://doi.org/10.1287/mnsc.2014.1957
