“YOU can’t rob a bank on charm and personality,” noted Willy Sutton, the prolific American criminal whose tool of choice was a Tommy gun. No matter how likeable the larcenist, a stickup is invariably an unpleasant experience for employees. According to a new paper* by Paola Acevedo of Tilburg University and Steven Ongena of the University of Zurich, the trauma affects how bankers subsequently do business.
The authors look at bank lending after heists in Colombia, a country where 835 bank robberies took place between 2003 and 2011. They find that loan officers treat would-be borrowers differently in the aftermath of an armed robbery. Loan volumes did not change, but the duration of loans issued in the first 90 days after a stickup is 70% longer. The average Colombian loan matures in 5.4 months, but a newly burgled branch typically lends for 8.7 months. The traumatised loan officers also demand collateral more of the time, and more of it, but offer slightly lower interest rates than normal.
All of these changes reduce the need to deal with new customers in person. Lending for longer periods pushes repayment meetings further into the...Continue reading
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