Costs of Job Rotation: Evidence from Mandatory Loan Officer Rotation

Published Online:https://doi.org/10.1287/mnsc.2020.3628

References

  • Acharya VV , Eisert T , Eufinger C , Hirsch C (2019) Whatever it takes: The real effects of unconventional monetary policy. Rev. Financial Stud. 32(9):3366–3411.CrossrefGoogle Scholar
  • Agarwal S , Ben-David I (2014) Do loan officers’ incentives lead to lax lending standards? Working paper, National University of Singapore, Singapore.Google Scholar
  • Agarwal S , Ben-David I (2018) Loan prospecting and the loss of soft information. J. Financial Econom. 129(3):608–628.CrossrefGoogle Scholar
  • Agarwal S , Hauswald R (2010) Distance and private information in lending. Rev. Financial Stud. 23(7):2757–2788.CrossrefGoogle Scholar
  • Agarwal S , Hauswald RB (2008) The choice between arm’s-length and relationship debt: Evidence from eLoans. Working paper, FRB of Chicago, Chicago.Google Scholar
  • Agarwal S , Alok S , Ghosh P , Ghosh S , Piskorski T , Seru A (2017) Banking the unbanked: What do 255 million new bank accounts reveal about financial access? Working paper, Columbia Business School, New York.Google Scholar
  • Aghion P , Tirole J (1994) The management of innovation. Quart. J. Econom. 109(4):1185–1209.CrossrefGoogle Scholar
  • Arya A , Mittendorf B (2004) Using job rotation to extract employee information. J. Law Econom. Organ. 20(2):400–414.CrossrefGoogle Scholar
  • Banerjee AV , Duflo E (2014) Do firms want to borrow more? Testing credit constraints using a directed lending program. Rev. Econom. Stud. 81(2):572–607.CrossrefGoogle Scholar
  • Berg T , Puri M , Rocholl J (2013) Loan officer incentives and the limits of hard information. NBER Working Paper No. 19051, National Bureau of Economic Research, Cambridge, MA.Google Scholar
  • Berger AN , Udell GF (2002) Small business credit availability and relationship lending: The importance of bank organisational structure. Econom. J. 112(477):F32–F53.Google Scholar
  • Berger AN , Miller NH , Petersen MA , Rajan RG , Stein JC (2005) Does function follow organizational form? Evidence from the lending practices of large and small banks. J. Financial Econom. 76(2):237–269.CrossrefGoogle Scholar
  • Bhue G , Prabhala N , Tantri P (2016) Do programs mandating small business lending disincentivize growth? Evidence from a policy experiment. Working paper, Indian School of Business, Hyderbad, India.Google Scholar
  • Breza E (2012) Peer effects and loan repayment: Evidence from the Krishna default crisis. Job market paper 1, MIT, Cambridge, MA.Google Scholar
  • Campion MA , Cheraskin L , Stevens MJ (1994) Career-related antecedents and outcomes of job rotation. Acad. Management J. 37(6):1518–1542.CrossrefGoogle Scholar
  • Chopra Y , Prabhala N , Tantri PL (2017) Bank accounts for the unbanked: Evidence from a big bang experiment. Working Paper No. RHS 2919091, Robert H. Smith School of Business, College Park, MD.Google Scholar
  • Cole S (2009) Fixing market failures or fixing elections? Agricultural credit in India. Amer. Econom. J. Appl. Econom. 1(1):219–250.CrossrefGoogle Scholar
  • Cole S , Kanz M , Klapper L (2015) Incentivizing calculated risk-taking: Evidence from an experiment with commercial bank loan officers. J. Finance 70(2):537–575.CrossrefGoogle Scholar
  • DeYoung R , Glennon D , Nigro P (2008) Borrower–lender distance, credit scoring, and loan performance: Evidence from informational-opaque small business borrowers. J. Financial Intermediation 17(1):113–143.CrossrefGoogle Scholar
  • Di Maggio M , Van Alstyne M (2012) Information sharing, social norms and performance! Working paper, MIT Sloan School of Management, Cambridge, MA.Google Scholar
  • Drexler A , Schoar A (2014) Do relationships matter? Evidence from loan officer turnover. Management Sci. 60(11):2722–2736.LinkGoogle Scholar
  • Eriksson T , Ortega J (2006) The adoption of job rotation: Testing the theories. Indust. Labor Relations Rev. 59(4):653–666.CrossrefGoogle Scholar
  • Fisman R , Paravisini D , Vig V (2017) Cultural proximity and loan outcomes. Amer. Econom. Rev. 107(2):457–492.CrossrefGoogle Scholar
  • Guiso L , Sapienza P , Zingales L (2013) The determinants of attitudes toward strategic default on mortgages. J. Finance 68(4):1473–1515.CrossrefGoogle Scholar
  • Hakenes H , Katolnik S (2017) On the incentive effects of job rotation. Eur. Econom. Rev. 98(2017):424–441.CrossrefGoogle Scholar
  • Hertzberg A , Liberti J , Paravisini D (2010) Information and incentives inside the firm: Evidence from loan officer rotation. J. Finance 65(3):795–828.CrossrefGoogle Scholar
  • Hirao Y (1993) Task assignment and agency structures. J. Econom. Management Strategy 2(2):299–323.CrossrefGoogle Scholar
  • Ho W-H , Chang CS , Shih Y-L , Liang R-D (2009) Effects of job rotation and role stress among nurses on job satisfaction and organizational commitment. BMC Health Services Res. 9(1):8.CrossrefGoogle Scholar
  • Holmstrom B (1982) Moral hazard in teams. Bell J. Econom. 13(2):324–340.CrossrefGoogle Scholar
  • Holmstrom B , Milgrom P (1991) Multitask principal-agent analyses: Incentive contracts, asset ownership, and job design. J. Law Econom. Organ. 7:24–52.CrossrefGoogle Scholar
  • Karmakar K , ed. (2008) Microfinance in India (Sage Publications, New Delhi, India).Google Scholar
  • Keys BJ , Mukherjee T , Seru A , Vig V (2010) Did securitization lead to lax screening? Evidence from subprime loans. Quart. J. Econom. 125(1):307–362.CrossrefGoogle Scholar
  • Laffont J-J , Tirole J (1991a) Auction design and favoritism. Internat. J. Indust. Organ. 9(1):9–42.CrossrefGoogle Scholar
  • Laffont J-J , Tirole J (1991b) The politics of government decision-making: A theory of regulatory capture. Quart. J. Econom. 106(4):1089–1127.CrossrefGoogle Scholar
  • Laffont J-J , Tirole J (1992a) Cost padding, auditing and collusion. Ann. Econom. Statist. 1992(25-26):205–226.Google Scholar
  • Laffont J-J , Tirole J (1992b) Should governments commit? Eur. Econom. Rev. 36(2):345–353.CrossrefGoogle Scholar
  • Lennox CS , Wu X , Zhang T (2014) Does mandatory rotation of audit partners improve audit quality? Accounting Rev. 89(5):1775–1803.CrossrefGoogle Scholar
  • Liberti JM , Mian AR (2009) Estimating the effect of hierarchies on information use. Rev. Financial Stud. 22(10):4057–4090.CrossrefGoogle Scholar
  • Mahadevan R , Suardi S (2013) Is there a role for caste and religion in food security policy? A look at rural India. Econom. Modelling 31(1):58–69.CrossrefGoogle Scholar
  • Mahul O , Verma N (2012) Improving farmers’ access to agricultural insurance in India. Working Paper 5987, The World Bank, Washington, DC.Google Scholar
  • Miller F , Dhaliwal T , Magas L (1973) Job rotation raises productivity. Indust. Engrg. 5(6):24–26.Google Scholar
  • Mukherjee S , Subramanian K , Tantri P (2018) Borrowers’ distress and debt relief: Evidence from a natural experiment. J. Law Econom. 61(4):607–635.CrossrefGoogle Scholar
  • Myers JN , Myers LA , Omer TC (2003) Exploring the term of the auditor-client relationship and the quality of earnings: A case for mandatory auditor rotation? Accounting Rev. 78(3):779–799.CrossrefGoogle Scholar
  • Ortega J (2001) Job rotation as a learning mechanism. Management Sci. 47(10):1361–1370.LinkGoogle Scholar
  • Petersen MA (2004) Information: Hard and soft. Working paper, Northwestern University, Evanston, IL.Google Scholar
  • Petersen MA , Rajan RG (2002) Does distance still matter? The information revolution in small business lending. J. Finance 57(6):2533–2570.CrossrefGoogle Scholar
  • Piskorski T , Seru A , Witkin J (2015) Asset quality misrepresentation by financial intermediaries: Evidence from the RMBS market. J. Finance 70(6):2635–2678.CrossrefGoogle Scholar
  • Puri M , Rocholl J , Steffen S (2010) What do a million observations have to say about loan defaults? Opening the black box of relationships. Preprint, submitted March 17, http://dx.doi.org/10.2139/ssrn.1572673.Google Scholar
  • Quartly CJ (1973) Job rotation is more than musical chairs. Supervisory Management 18(2):21–26.Google Scholar
  • Rajan RG , Zingales L (1998) Power in a theory of the firm. Quart. J. Econom. 113(2):387–432.CrossrefGoogle Scholar
  • Rajan RG , Zingales L (2001) The firm as a dedicated hierarchy: A theory of the origins and growth of firms. Quart. J. Econom. 116(3):805–851.CrossrefGoogle Scholar
  • Stein JC (2002) Information production and capital allocation: Decentralized versus hierarchical firms. J. Finance 57(5):1891–1921.CrossrefGoogle Scholar
  • Tantri PL (2018a) Contagious effects of a political intervention in debt contracts: Evidence using loan-level data. Rev. Financial Stud. 31(11):4556–4592.CrossrefGoogle Scholar
  • Tantri PL (2018b) Identifying zombie lending: Evidence using loan-level data. Working paper, Indian School of Business, Hyderbad, India.Google Scholar
  • Tantri PL , Thota N (2017) Inherent quality or nepotism: Performance analysis of political dynasties in a democracy. Working paper, Indian School of Business, Hyderbad, India.Google Scholar
  • The Hindu (2020) Mysuru farmers welcome move to halt loan recovery. The Hindu (January 23), https://www.thehindu.com/news/national/karnataka/mysuru-farmers-welcome-move-to-halt-loan-recovery/article30628509.ece.Google Scholar
  • Tirole J (1986) Hierarchies and bureaucracies: On the role of collusion in organizations. J. Law Econom. Organ. 2(3):181–214.Google Scholar
  • Tirole J (1992) Collusion and the theory of organizations. Laffont J-J , ed. Advances in Economic Theory: Proceedings of the Sixth World Congress of the Econometric Society , vol. 1 (Cambridge University Press, Cambridge, UK), 151–206.Google Scholar
  • Toffel MW , Short JL (2011) Coming clean and cleaning up: Does voluntary self-reporting indicate effective self-policing? J. Law Econom. 54(3):609–649.CrossrefGoogle Scholar
  • Towe C , Lawley C (2013) The contagion effect of neighboring foreclosures. Amer. Econom. J. Econom. Policy 5(2):313–335.CrossrefGoogle Scholar
  • Zingales L (2000) In search of new foundations. J. Finance 55(4):1623–1654.CrossrefGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.