Do Behavioral Biases Affect Credit Risk Assessment Methods?

The purpose of this study was to investigate the effect of bankers' behavioi on credit risk management. We examined whether and how individual e biases (i.e., loss aversion, optimism, overconfidence, and cognitive dis affect the banks' credit risk policy, including the risk assessment meth...

Full description

Saved in:
Bibliographic Details
Published in:Iranian journal of management studies 2023-03, Vol.16 (2), p.501-514
Main Authors: Azouzi, Mohamed Ali, Bacha, Sami
Format: Article
Language:English
Subjects:
Bank loans
Banking industry
Banks
Banks (Finance)
Behavior
Bias
Cognitive dissonance
Credit management
Credit risk
Decision making
Default
Emotions
Financial institutions
Hypotheses
Methods
Optimism
Risk assessment
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The purpose of this study was to investigate the effect of bankers' behavioi on credit risk management. We examined whether and how individual e biases (i.e., loss aversion, optimism, overconfidence, and cognitive dis affect the banks' credit risk policy, including the risk assessment meth quantitative vs. qualitative methods). Based on a sample of Tunisian b results showed that the bankers' emotional biases affect their preferences r the choice of credit risk assessment methods. The findings revealed that loss-averse, and overconfident bankers are more likely to adopt quantitative such as scoring when they assess the credit risk. The bankers with high dissonance, however, were found to have a high preference for a q approach.
ISSN:2008-7055
2345-3745
DOI:10.22059/ijms.2022.326105.674613