Subjectivity in Credit Allocation to Micro-Entrepreneurs: Evidence from Brazil
AbstractThis paper estimates the impact of loan officers' subjectivity on microcredit granting by exploiting an exceptionally detailed database from a Brazilian microfinance institution. Loan officers collect field data, meet with applicants, and make recommendations to the credit committee that in turn has the final say on both loan approval and loan size. The loan officers' subjectivity is captured through the lens of disparate treatment based on gender. Indeed, our estimations show that an unfair gender gap is observed in loan size, and that this gap is almost exclusively attributable to the loan officers. We interpret this finding as evidence that, despite monitoring and wage incentivization, microcredit officers keep letting their subjective preferences interfere with loan granting. We conclude by suggesting alternative means to curb subjectivity in credit allocation to micro-entrepreneurs.
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 11-016.
Length: 18 p.
Date of creation: May 2011
Date of revision:
Publication status: Published by:
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More information through EDIRC
Subjectivity Loan Size; Microcredit; Gender; Loan Officer; Entrepreneurs;
Other versions of this item:
- Isabelle Agier & Ariane Szafarz, 2013. "Subjectivity in credit allocation to micro-entrepreneurs: evidence from Brazil," Small Business Economics, Springer, vol. 41(1), pages 263-275, June.
- Isabelle Agier & Ariane Szafarz, 2013. "Subjectivity in Credit Allocation to Micro-Entrepreneurs: Evidence from Brazil," ULB Institutional Repository 2013/148889, ULB -- Universite Libre de Bruxelles.
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-24 (All new papers)
- NEP-BAN-2011-05-24 (Banking)
- NEP-ENT-2011-05-24 (Entrepreneurship)
- NEP-HME-2011-05-24 (Heterodox Microeconomics)
- NEP-LAM-2011-05-24 (Central & South America)
- NEP-MFD-2011-05-24 (Microfinance)
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