Credit Relationships: Evidence from Experiments with Real Bankers





  • We thank the Nef Foundation and the IGR Foundation for financial support. Financial support from the Agence Nationale de la Recherche (ANR-08-JCJC-0105–01, “CONFLICT” project) is also gratefully acknowledged. We are indebted to Elven Priour for programming the experiment. We also thank Monica Capra, Irene Comeig, and participants at the 2008 ESA meetings for their helpful comments.

  • Simon Cornéeis an Assistant Professor at CREM (CNRS–University of Rennes 1), Faculté de Sciences Economiques et IGR (E-mail: David Mascletis a Research Associate Professor at CREM (CNRS–University of Rennes 1) and CIRANO (Montreal), Faculté de Sciences Economiques (E-mail: Gervais Thenetis Professor of Management Sciences at IGR (University Rennes 1) (E-mail:


We experimentally examine to what extent long-term “lender–borrower” relationships mitigate moral hazard. The originality of our research lies in recruiting not only students but also commercial and social bankers. The opportunity to engage in bilateral long-term relationships mitigates the repayment problem. Lenders take advantage of their long-term situation by increasing their rates. Consequently, borrowers are incited to take more risk. Improving information disclosure ameliorates the repayment but does not incite lenders to offer more credits. Social bankers exhibit a higher probability of granting a loan and make fairer credit offers to borrowers than the other subject pools do.