What Do a Million Observations Have to Say About Loan Defaults? Opening the Black Box of Relationships
The paper evaluates the impact of aspects of customer-bank relationships on loan default rates. Using a dataset that consists of more than 1 million loans made by 296 German banks, the research finds that banks with relationship-specific information from customers establishing transaction accounts are less likely to experience loan defaults and act differently in screening and monitoring behaviors than banks with no information.
Manju Puri, Jörg Rocholl, Sascha Steffen