The Relationship Dilemma: Why Do Banks Differ in the Pace at Which They Adopt New Technology?
Abstract India introduced credit scoring technology in 2007. We study its adoption by the two main types of banks operating there: new private banks (NPBs) and state-owned public sector banks (PSBs). Soon after the technology is introduced, NPBs start checking the credit scores of most borrowers bef...
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| Veröffentlicht in: | The Review of financial studies 2022-06, Vol.35 (7), p.3418-3466 |
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| container_title | The Review of financial studies |
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| creator | Mishra, Prachi Prabhala, Nagpurnanand Rajan, Raghuram G |
| description | Abstract
India introduced credit scoring technology in 2007. We study its adoption by the two main types of banks operating there: new private banks (NPBs) and state-owned public sector banks (PSBs). Soon after the technology is introduced, NPBs start checking the credit scores of most borrowers before lending. PSBs do so equally quickly for new borrowers but very slowly for prior clients, although lending without checking scores is reliably associated with more delinquencies. We show that an important factor explaining the difference in adoption rates is the stickiness of past bank structures and managerial practices. Past practices inhibit better practices today.
Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online. |
| doi_str_mv | 10.1093/rfs/hhab118 |
| format | Article |
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India introduced credit scoring technology in 2007. We study its adoption by the two main types of banks operating there: new private banks (NPBs) and state-owned public sector banks (PSBs). Soon after the technology is introduced, NPBs start checking the credit scores of most borrowers before lending. PSBs do so equally quickly for new borrowers but very slowly for prior clients, although lending without checking scores is reliably associated with more delinquencies. We show that an important factor explaining the difference in adoption rates is the stickiness of past bank structures and managerial practices. Past practices inhibit better practices today.
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India introduced credit scoring technology in 2007. We study its adoption by the two main types of banks operating there: new private banks (NPBs) and state-owned public sector banks (PSBs). Soon after the technology is introduced, NPBs start checking the credit scores of most borrowers before lending. PSBs do so equally quickly for new borrowers but very slowly for prior clients, although lending without checking scores is reliably associated with more delinquencies. We show that an important factor explaining the difference in adoption rates is the stickiness of past bank structures and managerial practices. Past practices inhibit better practices today.
Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.</description><subject>2006-2015</subject><subject>Indien</subject><subject>Innovationsdiffusion</subject><subject>Kreditwürdigkeit</subject><subject>Private Banking</subject><subject>Öffentliche Bank</subject><issn>0893-9454</issn><issn>1465-7368</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2022</creationdate><recordtype>article</recordtype><recordid>eNp9kEtLw0AQgBdRsFZP_oE9eZG0O_vIw4vU1hcUFal4krDZzppomg3ZiOTfu9KCN08zDN98h4-QU2ATYJmYdtZPy1IXAOkeGYGMVZSION0nI5ZmIsqkkofkyPsPxhgIyUbkbVUifcZa95VrfFm1dFHVuNnoC_paDnTh6JVuPn24WosdrRrah4cnbZDqPiCVKWlQDHS2dm1PH_CbrtCUjavd-3B5TA6srj2e7OaYvNxcr-Z30fLx9n4-W0aGK95Haaq54DbWtmBCaqaTsADgupBgOGCmkoKbGJSwuFYsy1gMkCAmIAqlJRdjcr71ms5536HN267a6G7IgeW_ZfJQJt-VCTTd0mhcU_k_NgWlUg5KBuRsi7iv9l_XDxz5bgc</recordid><startdate>20220621</startdate><enddate>20220621</enddate><creator>Mishra, Prachi</creator><creator>Prabhala, Nagpurnanand</creator><creator>Rajan, Raghuram G</creator><general>Oxford University Press</general><scope>OQ6</scope><scope>AAYXX</scope><scope>CITATION</scope></search><sort><creationdate>20220621</creationdate><title>The Relationship Dilemma: Why Do Banks Differ in the Pace at Which They Adopt New Technology?</title><author>Mishra, Prachi ; Prabhala, Nagpurnanand ; Rajan, Raghuram G</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c252t-88a232f6afb034a0a7fb011edb41c21e957b2c6153fed509906117ee713b5a423</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2022</creationdate><topic>2006-2015</topic><topic>Indien</topic><topic>Innovationsdiffusion</topic><topic>Kreditwürdigkeit</topic><topic>Private Banking</topic><topic>Öffentliche Bank</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Mishra, Prachi</creatorcontrib><creatorcontrib>Prabhala, Nagpurnanand</creatorcontrib><creatorcontrib>Rajan, Raghuram G</creatorcontrib><collection>ECONIS</collection><collection>CrossRef</collection><jtitle>The Review of financial studies</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Mishra, Prachi</au><au>Prabhala, Nagpurnanand</au><au>Rajan, Raghuram G</au><au>Ramadorai, Tarun</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>The Relationship Dilemma: Why Do Banks Differ in the Pace at Which They Adopt New Technology?</atitle><jtitle>The Review of financial studies</jtitle><date>2022-06-21</date><risdate>2022</risdate><volume>35</volume><issue>7</issue><spage>3418</spage><epage>3466</epage><pages>3418-3466</pages><issn>0893-9454</issn><eissn>1465-7368</eissn><abstract>Abstract
India introduced credit scoring technology in 2007. We study its adoption by the two main types of banks operating there: new private banks (NPBs) and state-owned public sector banks (PSBs). Soon after the technology is introduced, NPBs start checking the credit scores of most borrowers before lending. PSBs do so equally quickly for new borrowers but very slowly for prior clients, although lending without checking scores is reliably associated with more delinquencies. We show that an important factor explaining the difference in adoption rates is the stickiness of past bank structures and managerial practices. Past practices inhibit better practices today.
Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.</abstract><pub>Oxford University Press</pub><doi>10.1093/rfs/hhab118</doi><tpages>49</tpages></addata></record> |
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| ispartof | The Review of financial studies, 2022-06, Vol.35 (7), p.3418-3466 |
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| source | Business Source Complete; Oxford University Press Journals All Titles (1996-Current) |
| subjects | 2006-2015 Indien Innovationsdiffusion Kreditwürdigkeit Private Banking Öffentliche Bank |
| title | The Relationship Dilemma: Why Do Banks Differ in the Pace at Which They Adopt New Technology? |
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