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A conceptual framework for bounded rationality in bank officers’ credit decision for SME lending in Malaysia / Nigel Kollin Ondolos, Jasman Tuyon and Rozita Uji Mohammed

Based on the Bounded Rational Theory, ideally, bank credit officers would be influenced by both rational (fundamental factors) and irrational (behavioral factors) in their credit assessment and decision making process. Emphasizing on the irrational decision making perspective, behavioral factors dis...

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Main Authors: Ondolos, Nigel Kollin, Tuyon, Jasman, Mohammed, Rozita Uji
Format: Article
Language:English
Published: Universiti Teknologi MARA 2021
Subjects:
HF Commerce
Banking
Online Access:https://ir.uitm.edu.my/id/eprint/56528/1/56528.pdf
https://ir.uitm.edu.my/id/eprint/56528/
https://apmaj.uitm.edu.my
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spelling my.uitm.ir.565282022-03-10T08:26:42Z https://ir.uitm.edu.my/id/eprint/56528/ A conceptual framework for bounded rationality in bank officers’ credit decision for SME lending in Malaysia / Nigel Kollin Ondolos, Jasman Tuyon and Rozita Uji Mohammed Ondolos, Nigel Kollin Tuyon, Jasman Mohammed, Rozita Uji HF Commerce Banking Based on the Bounded Rational Theory, ideally, bank credit officers would be influenced by both rational (fundamental factors) and irrational (behavioral factors) in their credit assessment and decision making process. Emphasizing on the irrational decision making perspective, behavioral factors distort the credit decision making process in the banking industry. Despite such evidence, the psychology perspectives in bank lending practice has been given little attention in research and neglected in practice and policy perspectives. This conceptual research investigated the role of irrationality in bank lending decision making. The research design involved three stages. The research started with conceptualization of the bounded rational credit decision framework. This was designed based on review of three theories and related empirical evidence. In the second stage, constructs and their measurement items were sourced from prior work. Thereafter, a questionnaire was developed. In the third stage, the validity of the questionnaire was tested using expert validation, pre-test and pilot test involving 30 credit officers working in business banking division of a Malaysian bank. Findings from the pilot study confirmed the validity of the questionnaire as an instrument that can be used for future empirical test. This bounded rational credit decision framework can guide further empirical analysis on the role of behavioral factors in lending decision making. The framework provides new insights that are valuable in enhancing the SMEs lending theory, practice, and policy. Universiti Teknologi MARA 2021-12 Article PeerReviewed text en https://ir.uitm.edu.my/id/eprint/56528/1/56528.pdf ID56528 Ondolos, Nigel Kollin and Tuyon, Jasman and Mohammed, Rozita Uji (2021) A conceptual framework for bounded rationality in bank officers’ credit decision for SME lending in Malaysia / Nigel Kollin Ondolos, Jasman Tuyon and Rozita Uji Mohammed. Asia-Pacific Management Accounting Journal (APMAJ), 16 (3): 31. pp. 159-189. ISSN 2550-1631 https://apmaj.uitm.edu.my
institution Universiti Teknologi Mara
building Tun Abdul Razak Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Teknologi Mara
content_source UiTM Institutional Repository
url_provider http://ir.uitm.edu.my/
language English
topic HF Commerce
Banking
spellingShingle HF Commerce
Banking
Ondolos, Nigel Kollin
Tuyon, Jasman
Mohammed, Rozita Uji
A conceptual framework for bounded rationality in bank officers’ credit decision for SME lending in Malaysia / Nigel Kollin Ondolos, Jasman Tuyon and Rozita Uji Mohammed
description Based on the Bounded Rational Theory, ideally, bank credit officers would be influenced by both rational (fundamental factors) and irrational (behavioral factors) in their credit assessment and decision making process. Emphasizing on the irrational decision making perspective, behavioral factors distort the credit decision making process in the banking industry. Despite such evidence, the psychology perspectives in bank lending practice has been given little attention in research and neglected in practice and policy perspectives. This conceptual research investigated the role of irrationality in bank lending decision making. The research design involved three stages. The research started with conceptualization of the bounded rational credit decision framework. This was designed based on review of three theories and related empirical evidence. In the second stage, constructs and their measurement items were sourced from prior work. Thereafter, a questionnaire was developed. In the third stage, the validity of the questionnaire was tested using expert validation, pre-test and pilot test involving 30 credit officers working in business banking division of a Malaysian bank. Findings from the pilot study confirmed the validity of the questionnaire as an instrument that can be used for future empirical test. This bounded rational credit decision framework can guide further empirical analysis on the role of behavioral factors in lending decision making. The framework provides new insights that are valuable in enhancing the SMEs lending theory, practice, and policy.
format Article
author Ondolos, Nigel Kollin
Tuyon, Jasman
Mohammed, Rozita Uji
author_facet Ondolos, Nigel Kollin
Tuyon, Jasman
Mohammed, Rozita Uji
author_sort Ondolos, Nigel Kollin
title A conceptual framework for bounded rationality in bank officers’ credit decision for SME lending in Malaysia / Nigel Kollin Ondolos, Jasman Tuyon and Rozita Uji Mohammed
title_short A conceptual framework for bounded rationality in bank officers’ credit decision for SME lending in Malaysia / Nigel Kollin Ondolos, Jasman Tuyon and Rozita Uji Mohammed
title_full A conceptual framework for bounded rationality in bank officers’ credit decision for SME lending in Malaysia / Nigel Kollin Ondolos, Jasman Tuyon and Rozita Uji Mohammed
title_fullStr A conceptual framework for bounded rationality in bank officers’ credit decision for SME lending in Malaysia / Nigel Kollin Ondolos, Jasman Tuyon and Rozita Uji Mohammed
title_full_unstemmed A conceptual framework for bounded rationality in bank officers’ credit decision for SME lending in Malaysia / Nigel Kollin Ondolos, Jasman Tuyon and Rozita Uji Mohammed
title_sort conceptual framework for bounded rationality in bank officers’ credit decision for sme lending in malaysia / nigel kollin ondolos, jasman tuyon and rozita uji mohammed
publisher Universiti Teknologi MARA
publishDate 2021
url https://ir.uitm.edu.my/id/eprint/56528/1/56528.pdf
https://ir.uitm.edu.my/id/eprint/56528/
https://apmaj.uitm.edu.my
_version_ 1728054812321251328
score 13.211869

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