Psychology: Loan applications processed around 12pm are more likely to be ...

Applying for a loan? Avoid midday! Applications processed around 12pm are more likely to be rejected as bankers suffer from 'decision fatigue' Researchers studied the decisions made by 30 bank credit officers over a month Specifically, they looked at 26,501 loan repayment restructuring requests Decision fatigue is caused by making too many difficult choices in a row  While refusing a loan restructure involves a loss to the bank, defaulting is worse The declined requests around lunchtime cost the bank some $500,000 overall 

By Ian Randall For Mailonline

Published: 00:00 BST, 5 May 2021 | Updated: 00:08 BST, 5 May 2021

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Bank credit officers are more likely to approve loan requests early and late in the working day — and reject those processed around noon, a study found.

UK psychologists studied the decisions made on 26,501 loan restructuring requests by a major bank's team of 30 credit officers over the course of one month.

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They found the officers appeared to develop 'decision fatigue' around the middle of the day, making them more likely to default to the safer option of saying no.

Processing loan-related requests involves weighing up the customer's financial strengths against their risk factors — and is therefore cognitively demanding.

Making the wrong decision can be costly, as although restructuring often results in a loss compared to the original payment plan, defaulting can be worse for the bank.

According to the team, the findings highlight how having regular breaks amid long periods of intense work can make employees more productive overall.

Bank credit officers are more likely to approve loan requests early and late in the working day ¿ and reject those processed around 12pm, a study found (stock image)

Bank credit officers are more likely to approve loan requests early and late in the working day — and reject those processed around 12pm, a study found (stock image)

DECISION FATIGUE 

Decision fatigue is the mental exhaustion caused by having to make difficult decisions repeatedly over the course of long period of time.

Past research showed that this fatigue leads people to fall back on whatever the 'default' choice is — the option that either seems easier or safer. 

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'Credit officers were more willing to make the difficult decision of granting a customer more lenient loan repayment terms in the morning,' said paper author and psychologist Simone Schnall of the University of Cambridge.

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'But by midday they showed decision fatigue and were less likely to agree to a loan restructuring request.'

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