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NUMERACY AND ON‐THE‐JOB PERFORMANCE: EVIDENCE FROM LOAN OFFICERS
Author(s) -
Brown Martin,
Kirschenmann Karolin,
Spycher Thomas
Publication year - 2020
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12873
Subject(s) - numeracy , loan , boom , business , economics , actuarial science , finance , literacy , engineering , environmental engineering , economic growth
We examine how the numeracy level of employees influences their on‐the‐job performance. Based on an administrative dataset of a retail bank we relate the performance of loan officers in a standardized math test to the accuracy of their credit assessments of small business borrowers. We find that loan officers with a high level of numeracy are more accurate in assessing the credit risk of borrowers. The effect is most pronounced during the precrisis credit boom period when it is arguably more difficult to pick out risky borrowers. ( JEL G21, J24)