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Discrimination by Microcredit Officers:Theory and Evidence on Disability in Uganda

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  • Pierre-Guillaume Méon
  • Roy Mersland
  • Ariane Szafarz
  • Marc Labie

Abstract

This paper studies the relationship between a microfinance institution (MFI) and its credit officers when the latter discriminate against a group of the target population. Using survey data from Uganda, we provide evidence that credit officers are more biased against disabled borrowers than other employees. In line with the evidence, we then build an agency model of a non-profit MFI and a discriminating credit officer. Since incentive schemes are costly and the MFI’s budget is limited, even a non-discriminating welfare-maximizing MFI may prefer paying smaller incentivizing compensation, and letting its credit officer discriminate to some extent.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series DULBEA Working Papers with number 11-06.

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Length: 35 p.
Date of creation: 18 May 2011
Date of revision:
Publication status: Published by:
Handle: RePEc:dul:wpaper:2013/87194

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Related research

Keywords: Microfinance; Discrimination; Credit Officers; Incentives; Disability;

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References

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Citations

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Cited by:
  1. Isabelle Agier & Ariane Szafarz, 2010. "Microfinance and Gender: Is There a Glass Ceiling in Loan Size?," Working Papers CEB 10-047, ULB -- Universite Libre de Bruxelles.
  2. Isabelle Agier & Ariane Szafarz, 2011. "Subjectivity in Credit Allocation to Micro-Entrepreneurs: Evidence from Brazil," Working Papers CEB 11-016, ULB -- Universite Libre de Bruxelles.
  3. Isabelle Agier & Ariane Szafarz, 2011. "Credit to Women Entrepreneurs: The Curse of the Trustworthier Sex," Working Papers CEB 11-005, ULB -- Universite Libre de Bruxelles.

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