Article ID: | iaor2017978 |
Volume: | 40 |
Issue: | 1 |
Start Page Number: | 5 |
End Page Number: | 32 |
Publication Date: | Mar 2017 |
Journal: | Journal of Financial Research |
Authors: | Sedunov John |
Keywords: | finance & banking, investment, decision |
I examine the effect that technology has on soft‐information lending and address issues within the banking literature on quantifying bank technology. I find that banks engage in less soft‐information lending when back‐office bank technology is more productive and that banks engage in less soft‐information lending when they own interactive web technology. I find that competition, lending decisions, and bank size are the primary drivers of technological development. I show that these results are robust to econometric tests that account for endogeneity, to an alternative definition of the bank's size, and to the inclusion of lending portfolio controls.