An investigation into the information processing heuristics of private banking and real estate banking lenders in a commercial banking environment.

摘要

Judgment, decision making, and choice are the essence of economics and finance. The primary objective of financial managers, investors, investment advisors, and lending professionals is to make decisions that provide adequate risk-adjusted returns. Unfortunately, there has been little research focused on individual decision making in a financial setting as limitations in human decision making have only been recently introduced into the financial literature. Well documented research in psychology, accounting, and consumer research that shows human decision makers incorporate preconscious information processing heuristics that lead to sub-optimal, or biased, decision making provides the theoretical foundation for this study.;The study's empirical results show that lending experts with overlapping domains of expertise address tasks in systematically different ways. In the two specific real estate lending trials completed for this study, real estate banking lenders and private banking lenders, when faced with identical lending transactions, used different information processing heuristics to access information. Each lender groups' task definition and schema were so divergent that opposite conclusions were made by each lender group even when presented with the same range of information cues. The private banking lenders generally accessed guarantor specific information cues and the real estate banking lenders accessed real estate specific information cues. The two lender groups' differing acquisition strategies and information cue weightings caused the two lender groups to make opposite lending decisions in each of the two cases. The private banking lenders were willing to mitigate real estate market risk with other forms of credit support, but the real estate banking lenders did not evidence any willingness to use other mitigation techniques. Lending specialists develop domain-specific expertise, but the information processing heuristics and schema that are prerequisites to expertise also limit the breadth of decision alternatives and access to creative solutions. This implies the potential for sub-optimal institutional decision making.