Hierarchy of bank loan approval and loan performance

  • Giorgio Calcagnini
  • Rebel Cole
  • Germana Giombini
  • Gloria Grandicelli


This paper analyzes data from a regional Italian bank to provide new evidence on the relationship between who, within a bank, approves a loan and the subsequent performance of the loan. The size of the bank and its pool of clients, who are primarily small- and medium-size firms, comprises characteristics of both relationship-based and transaction-based lending technologies. Our key finding is that the probability of loan default increases as the loan approval decision is made at higher levels of the lending-decision hierarchy. This evidence supports the primacy of relationship-lending technology relative to transaction-based lending technology.


Lending technologies SMEs funding Soft and hard information Relationship lending 

JEL Classification

G21 G28 L25 O12 O16 



The authors thank Bob Chirinko, two anonymous referees, and participants at the International Conference on Small Businesses, Banks, Finance, Innovation and Growth held in Urbino, 12-13 October 2017, for helpful comments and suggestions. The usual disclaimers apply.


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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Università di Urbino Carlo BoUrbinoItaly
  2. 2.Mo.Fi.R.Politechnic University of MarcheAnconaItaly
  3. 3.Florida Atlantic UniversityBoca RatonUSA

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