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Sex and Credit: Is There a Gender Bias in Lending?

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  • Thorsten Beck
  • Patrick Behr
  • Andreas Madestam

Abstract

We exploit the quasi-random assignment of borrowers to loan officers using data from a large Albanian lender to show that own-gender preferences affect both credit supply and demand. Borrowers matched to officers of the opposite sex are less likely to return for a second loan. The effect is larger when officers have little prior exposure to borrowers of the other gender and when they have more discretion to act on their gender beliefs, as proxied by financial market competition and branch size. We examine one channel of influence, loan conditionality. Borrowers assigned to opposite-sex officers pay higher interest rates and receive lower loan amounts, but do not experience higher arrears. Our results imply that own-gender preferences in the credit market can have substantial negative welfare effects.

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Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 411.

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Date of creation: 2011
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Handle: RePEc:igi:igierp:411

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Cited by:
  1. Juri Marcucci & Paolo Emilio Mistrulli, 2013. "Female entrepreneurs in trouble: do their bad loans last longer?," Questioni di Economia e Finanza (Occasional Papers) 185, Bank of Italy, Economic Research and International Relations Area.

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