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 pre-crisis credit boom period when it is arguably more difficult to pick out risky borrowers.

Brown, Martin, Karolin Kirschenmann and Thomas Spycher (2020), Numeracy and on-the-job performance: Evidence from loan officers, Economic Inquiry 58 (2), 998-1022. Download

Authors

Brown, Martin
Kirschenmann, Karolin
, Thomas Spycher

Keywords

banking, numeracy, loan officers, screening