What role is played by different types of institution in the credit risk incurred by borrowers? Carey et al. (1998) find that specialist finance firms are more willing than banks to lend to riskier borrowers. There is considerable literature on the incentives of savings banks to adopt credit policies that differ from those commercial banks in terms of levels of risk. In general, what has been found is that institutions controlled by shareholders have greater incentives to take on more risk than those controlled by managers, due to the fact that the latter have invested specific human capital or.
