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Discriminatory Lending: Evidence from Bankers in the Lab

Author

Listed:
  • J. Michelle Brock
  • Ralph De Haas

Abstract

We implement a lab-in-the-field experiment with 334 Turkish loan officers to document gender discrimination in small business lending and unpack mechanisms. Officers review multiple real-life loan applications in which we randomize applicant gender. While unconditional approval rates are the same, officers are 26 percent more likely to require a guarantor when we present the same application as coming from a female instead of a male entrepreneur. A causal forest algorithm to estimate heterogeneous treatment effects reveals that discrimination is concentrated among young, inexperienced, and gender-biased officers. Discrimination mainly affects female loan applicants in male-dominated industries, indicating how financial frictions can perpetuate entrepreneurial gender segregation across sectors.

Suggested Citation

  • J. Michelle Brock & Ralph De Haas, 2023. "Discriminatory Lending: Evidence from Bankers in the Lab," American Economic Journal: Applied Economics, American Economic Association, vol. 15(2), pages 31-68, April.
    • Handle: RePEc:aea:aejapp:v:15:y:2023:i:2:p:31-68
    DOI: 10.1257/app.20210180
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    Cited by:

    1. Vojtech Bartos & Silvia Castro & Kristina Czura & Timm Opitz, 2023. "Gendered Access to Finance: The Role of Team Formation, Idea Quality, and Implementation Constraints in Business Evaluations," CESifo Working Paper Series 10719, CESifo.
    2. Grover, Arti & Viollaz, Mariana, 2025. "The Gendered Impact of Social Norms on Financial Access and Capital Misallocation," IZA Discussion Papers 17630, Institute of Labor Economics (IZA).
    3. Patrick Rehill, 2024. "How do applied researchers use the Causal Forest? A methodological review of a method," Papers 2404.13356, arXiv.org, revised Dec 2024.
    4. Mark Kattenberg & Bas Scheer & Jurre Thiel, 2023. "Causal forests with fixed effects for treatment effect heterogeneity in difference-in-differences," CPB Discussion Paper 452, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Zuchowski, David, 2025. "Sanctuary policies and the mortgage market behavior: Reducing uncertainty to promote financial inclusion," Journal of Economic Behavior & Organization, Elsevier, vol. 229(C).
    6. Tabea Bucher-Koenen & Andreas Hackethal & Johannes Koenen & Christine Laudenbach, 2021. "Gender Differences in Financial Advice," ECONtribute Discussion Papers Series 095, University of Bonn and University of Cologne, Germany.
    7. Susan Athey & Dean Karlan & Emil Palikot & Yuan Yuan, 2022. "Smiles in Profiles: Improving Efficiency While Reducing Disparities in Online Marketplaces," Papers 2209.01235, arXiv.org, revised Mar 2025.
    8. Gordon Burtch & Alejandro Zentner, 2024. "Gender Bias and Property Taxes," Papers 2412.12610, arXiv.org, revised Feb 2025.
    9. Hao, Xuejing & Hu, Feng & Li, Zhu, 2024. "Entrepreneur-investor gender match effects in startup funding: Evidence from an entrepreneurial-themed reality TV show in China," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 811-832.
    10. Diego Javier Ubfal, 2023. "What Works in Supporting Women-led Businesses?," World Bank Publications - Reports 38564, The World Bank Group.
    11. Anastasia Cozarenco & Ariane Szafarz, 2024. "How to identify lending bias when the lender's goal is not profit?," Working Papers CEB 24-007, ULB -- Universite Libre de Bruxelles.
    12. Asuamah Yeboah, Samuel & Mogre, Diana & Nartey Menzo, Benjamin Prince, 2024. "Beyond the Numbers: Social Factors in Credit Risk," MPRA Paper 122363, University Library of Munich, Germany, revised 20 Aug 2024.
    13. Pereira, Rui & O'Connell, Timmy, 2025. "The “pink tax” for solar panels: Financial returns on solar investments by gender in Los Angeles, California," Energy Economics, Elsevier, vol. 147(C).
    14. Mertz, Mikkel & Ronchi, Maddalena & Salvestrini, Viola, 2025. "Female Representation and Talent Allocation in Entrepreneurship: The Role of Early Exposure to Entrepreneurs," IZA Discussion Papers 17801, Institute of Labor Economics (IZA).
    15. Tefera, Girum Abebe & Cassidy, Rachel & Weis, Toni Johannes, 2025. "Access to Capital and Women's Entrepreneurship," Policy Research Working Paper Series 11232, The World Bank.
    16. Ye Zhang, 2020. "Discrimination in the Venture Capital Industry: Evidence from Field Experiments," Papers 2010.16084, arXiv.org, revised Aug 2022.
    17. Bruno Merlevede, 2025. "Female Managers and Firm Performance in Europe," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 25/1110, Ghent University, Faculty of Economics and Business Administration.
    18. Ozili, Peterson K, 2024. "Artificial intelligence and central bank digital currency," MPRA Paper 121567, University Library of Munich, Germany.
    19. Ekin Ayşe Özşuca, 2025. "Gender gap in digital financial inclusion across generations," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 52(2), pages 197-210, May.
    20. Chen, S. & Doerr, S. & Frost, J. & Gambacorta, L. & Shin, H.S., 2023. "The fintech gender gap," Journal of Financial Intermediation, Elsevier, vol. 54(C).
    21. Liu, Tao & Yu, Yanxin & Gong, Di & Guo, Min, 2024. "Geographic disparities in bank lending: Evidence from an auto loan market," Pacific-Basin Finance Journal, Elsevier, vol. 88(C).
    22. Bach, Thang Ngoc & Le, Thanh & Nguyen, Thang Xuan & Hoang, Khanh, 2023. "Gender discrimination, social networks and access to informal finance of Vietnamese small and medium enterprises," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 358-372.
    23. Francesco D'Acunto & Janet Gao & Lu Liu & Kai Lu & Zhengwei Wang & Jun Yang, 2025. "Subjective Expectations and Financial Intermediation," CESifo Working Paper Series 11780, CESifo.
    24. Liang, Weijuan & Tang, Mu & Wang, Yuanyuan & Ning, Bo & Chen, Jianing, 2025. "Women helping women? Female local official and gender gap in bank credit," Finance Research Letters, Elsevier, vol. 71(C).

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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