To read the full version of this content please select one of the options below:

Heuristic use, credit constraints and real estate lending

William G. Hardin III (Department of Economics and Business Administration, Morehouse College, Atlanta, Georgia, USA)

Journal of Property Valuation and Investment

ISSN: 0960-2712

Article publication date: 1 August 1997

Abstract

Presents an investigation into the existence of information processing heuristics in two commercial bank lender types that provide investment and construction loans secured by real estate. Expert real estate banking lenders and expert private banking lenders evidenced different, systematic group specific heuristic usage. Heuristics constrained information cue relevancy and affected the lending decision. Expert private banking lenders mitigated real estate risk by using non‐collateral specific information cues. Real estate lending experts did not mitigate real estate market risk and required favourable collateral specific information cues in order to approve a loan. Concludes that access to credit for real estate investment may be limited by lender expertise because the development of expertise mandates restrictive task interpretation and cue relevance.

Keywords

Citation

Hardin, W.G. (1997), "Heuristic use, credit constraints and real estate lending", Journal of Property Valuation and Investment, Vol. 15 No. 3, pp. 245-255. https://doi.org/10.1108/14635789710184961

Publisher

:

MCB UP Ltd

Copyright © 1997, MCB UP Limited