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Abstract

Women entrepreneurs are known not only to reimburse loans swifter than men, but also to receive smaller loans. However, on average women have smaller-scope business projects and are poorer than men. A deeper investigation is thus required in order to assess the existence of gender discrimination in small-business lending. This is precisely the aim of this paper. Its contribution is twofold. Firstly, it proposes a new estimation method for assessing discrimination in loan allocation. This method operationalizes the theoretical “double standard” approach developed by Ferguson and Peters (1995, Journal of Finance). Secondly, this paper applies the new methodology to an exceptionally rich database from a Brazilian microfinance institution. The empirical results point to gender discrimination. Additionally, it is shown that reducing the information asymmetry through relationship brings no remedy to the curse of the trustworthier sex.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 11-005.

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Length: 33 p.
Date of creation: Feb 2011
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/76871

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Related research

Keywords: Small Business; Microcredit; Gender; Loan Size; Denial Rate; Default;

Find related papers by JEL classification:

• G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
• L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
• O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
• M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups

This paper has been announced in the following NEP Reports:

• NEP-ALL-2011-03-05 (All new papers)
• NEP-ENT-2011-03-05 (Entrepreneurship)
• NEP-HME-2011-03-05 (Heterodox Microeconomics)
• NEP-MFD-2011-03-05 (Microfinance)

References

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18. Thi Thu Tra Pham & Robert Lensink, 2007. "Lending policies of informal, formal and semiformal lenders," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15(2), pages 181-209, 04.
19. Verheul, I. & Thurik, A.R., 2000. "Start-Up Capital," Research Paper ERS-2000-07-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:

1. The curse of the more trustworthy gender
   by Economic Logician in Economic Logic on 2011-04-06 13:42:00

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Cited by:

1. Weber, Ron & Musshoff, Oliver, 2012. "Microfinance for agricultural firms - What can we learn from bank data?," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126708, International Association of Agricultural Economists.
2. Koen Rossel-Cambier, 2011. "Is Combined Microfinance an Instrument to enhance Sustainable Pro-Poor Public Policy Outcomes?," Working Papers CEB 11-013, ULB -- Universite Libre de Bruxelles.

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