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Both, either, or neither? Taste-based and statistical discrimination in personal loan applications

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  • Saibal Ghosh

Abstract

Using cross-sectional data on over 51,000 individuals from a large public sector bank in India, we examine the determinants of loan rejection. The findings indicate that females with high credit scores are less likely to be rejected, suggesting evidence of favourable treatment. Additionally, applicants with higher incomes are less likely to face rejection, highlighting the presence of statistical discrimination. Various robustness checks support these conclusions. The paper concludes with policy implications drawn from the analysis.

Suggested Citation

  • Saibal Ghosh, 2025. "Both, either, or neither? Taste-based and statistical discrimination in personal loan applications," Modern Finance, Modern Finance Institute, vol. 3(4), pages 66-79.
    • Handle: RePEc:bdy:modfin:v:3:y:2025:i:4:p:66-79:id:415
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    References listed on IDEAS

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    1. Saibal Ghosh, 2023. "Religion, caste and access to credit by SMEs: Is there a link?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2160126-216, December.
    2. Saibal Ghosh, 2025. "Gender and SME credit: post-COVID-19 evidence for India," Applied Economics Letters, Taylor & Francis Journals, vol. 32(12), pages 1813-1818, July.
    3. Francesco D’Acunto & Ulrike Malmendier & Michael Weber, 2021. "Gender roles produce divergent economic expectations," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 118(21), pages 2008534118-, May.
    4. Sunil Mitra Kumar & Ragupathy Venkatachalam, 2019. "Caste and Credit: A Woeful Tale?," Journal of Development Studies, Taylor & Francis Journals, vol. 55(8), pages 1816-1833, August.
    5. Fafchamps, Marcel, 2000. "Ethnicity and credit in African manufacturing," Journal of Development Economics, Elsevier, vol. 61(1), pages 205-235, February.
    6. Kumar, Sunil Mitra, 2013. "Does Access to Formal Agricultural Credit Depend on Caste?," World Development, Elsevier, vol. 43(C), pages 315-328.
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