Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212425 
Year of Publication: 
2018
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 17/2018
Publisher: 
Bank of Finland, Helsinki
Abstract: 
We assess the extent to which discretion, unexplained variations in the terms of a loan contract, has varied across time and lending institutions and show that part of this discretion is due to private information that lenders have on their borrowers. We find that discretion is lower for secured loans and loans granted by a larger group of lenders, and is larger when the lenders are larger and more profitable. Over time, discretion is also lower around recessions although the private information content is higher. The results suggest that bank discretionary and private information acquisition behaviour may be important features of the credit cycle.
JEL: 
D82
G14
G21
G28
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-241-9
Document Type: 
Working Paper

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