Do Relationships Matter? Evidence from Loan Officer Turnover
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...
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| Format: | Article |
| Language: | en_US |
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Institute for Operations Research and the Management Sciences (INFORMS)
2014
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| Online Access: | http://hdl.handle.net/1721.1/90481 https://orcid.org/0000-0002-3658-9131 |
| _version_ | 1826188160089980928 |
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| author | Drexler, Alejandro Schoar, Antoinette |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Drexler, Alejandro Schoar, Antoinette |
| author_sort | Drexler, Alejandro |
| collection | MIT |
| description | 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. |
| first_indexed | 2024-09-23T07:55:28Z |
| format | Article |
| id | mit-1721.1/90481 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T07:55:28Z |
| publishDate | 2014 |
| publisher | Institute for Operations Research and the Management Sciences (INFORMS) |
| record_format | dspace |
| spelling | mit-1721.1/904812022-09-30T01:01:18Z Do Relationships Matter? Evidence from Loan Officer Turnover Drexler, Alejandro Schoar, Antoinette Sloan School of Management Schoar, Antoinette 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. 2014-09-30T16:16:19Z 2014-09-30T16:16:19Z 2014-08 2013-05 Article http://purl.org/eprint/type/JournalArticle 0025-1909 1526-5501 http://hdl.handle.net/1721.1/90481 Drexler, Alejandro, and Antoinette Schoar. “Do Relationships Matter? Evidence from Loan Officer Turnover.” Management Science (August 2014). https://orcid.org/0000-0002-3658-9131 en_US http://dx.doi.org/10.1287/mnsc.2014.1957 Management Science Creative Commons Attribution-Noncommercial-Share Alike http://creativecommons.org/licenses/by-nc-sa/4.0/ application/pdf Institute for Operations Research and the Management Sciences (INFORMS) Schoar |
| spellingShingle | Drexler, Alejandro Schoar, Antoinette Do Relationships Matter? Evidence from Loan Officer Turnover |
| title | Do Relationships Matter? Evidence from Loan Officer Turnover |
| title_full | Do Relationships Matter? Evidence from Loan Officer Turnover |
| title_fullStr | Do Relationships Matter? Evidence from Loan Officer Turnover |
| title_full_unstemmed | Do Relationships Matter? Evidence from Loan Officer Turnover |
| title_short | Do Relationships Matter? Evidence from Loan Officer Turnover |
| title_sort | do relationships matter evidence from loan officer turnover |
| url | http://hdl.handle.net/1721.1/90481 https://orcid.org/0000-0002-3658-9131 |
| work_keys_str_mv | AT drexleralejandro dorelationshipsmatterevidencefromloanofficerturnover AT schoarantoinette dorelationshipsmatterevidencefromloanofficerturnover |