The organization of credit decision making in times of crises.

Purpose and goal

The project objective was to study how banks respond organizationally to a crisis situation. We wanted to study both how a bank uses organizational change to avoid a future crisis and the actual impact of these organizational changes in the credit decision process, the process most sensitive to a future financial crises. The bank from which we have taken our empirical data was near bankruptcy during the financial crisis in the early 90s and suffered heavy losses in parts of the business during the crisis of 2007-2008, this strongly contributed to the project´s fulfillment of it´s goals.

Expected results and effects

Since the financial crisis in the beginning of 1990s the credit decision routine, due to the bank´s internal work, Swedish legislation and EU requirements, has evolved from being completely manual with large local variations to an IT-based routine with detailed requirements of information and decisions. External as well as internal decision makers use laws and regulations to avoid a future financial crisis. Our material shows though that the more specified rules, the more important the credit officers´ ability to interpret and adapt the rules to specific situations.

Planned approach and implementation

The project builds on quantitative data from an annual employee survey and a review of organisational documentation as well as qualitative data from semi-structured interviews with managers etc. and observations of a training program for credit officers. The analytical phase continued until we experienced saturation in the data collection and analysis. In sum, we have deployed a methodological approach based on an ongoing repetition of data collection, analysis and interpretation, discussion of the analysis and interpretation with informants and collection of new data.