Learning‐by‐lending and learning‐by‐repaying:A two‐sided learning model for defaults on Small Business Administration loans

Patel, Pankaj C. and Tsionas, Mike G. (2022) Learning‐by‐lending and learning‐by‐repaying:A two‐sided learning model for defaults on Small Business Administration loans. Managerial and Decision Economics, 43 (4). pp. 906-919. ISSN 0143-6570

Text (0. MDE RR1_v2_clean)
0._MDE_RR1_v2_clean.pdf - Accepted Version
Restricted to Repository staff only until 3 August 2023.
Available under License Creative Commons Attribution-NonCommercial.
Download (438kB)

Abstract

Drawing on a sample of Small Business Administration (SBA) loans, we develop and test for a two-sided dynamic learning model to assess the degree of learning-by-lending in bank branches and learning-by-repaying for borrowers. The results show that learning-by-lending is negligible; however, learning-by-repaying is small but meaningful, with a shallow learning curve slope of 0.2. The findings have implications for two-sided learning and for policymakers aiming to lower defaults in SBA loans.