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How gender and emotions bias the credit decision-making in banking firms

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  • Bacha, Sami
  • Azouzi, Mohamed Ali

Abstract

This study sheds the light on the effect of the emotional bias and the gender on the credit risk management of Tunisian banks. We may expect that male and female CEO react differently to emotions and that gender-based behavior differences will affect the organizational design of the credit decision making. We opt for a Bayesian Net Work method which uses the variables to express the events or objects and analyze their behaviors to model such causal relationships. Results show that emotional bias can explain the cross-sectional heterogeneity in risk-taking behavior among banks and that managers’ gender types influences the propensity to delegate the credit decision making. Overconfident and optimist female banks’ manager are more conservative than males and they tend to centralize the credit decision-making process. Findings show also that financial literacy significatively affect the credit decision making, whereas bank size have no effect.

Suggested Citation

  • Bacha, Sami & Azouzi, Mohamed Ali, 2019. "How gender and emotions bias the credit decision-making in banking firms," Journal of Behavioral and Experimental Finance, Elsevier, vol. 22(C), pages 183-191.
  • Handle: RePEc:eee:beexfi:v:22:y:2019:i:c:p:183-191
    DOI: 10.1016/j.jbef.2019.03.004
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    Cited by:

    1. Zhu, Zhaobo & Qi, Zhenyan & Jin, Yi, 2023. "Familiarity bias and economic decisions: Evidence from a survey experiment," Economics Letters, Elsevier, vol. 229(C).
    2. Bertrand, Jérémie & Burietz, Aurore, 2023. "(Loan) price and (loan officer) prejudice," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 26-42.
    3. Diamonalisa Sofianty & Etty Murwaningsari & Susi Dwi Mulyani, 2022. "Gender Diversity Effect on Tax Avoidance and Firm Risk," Technium Social Sciences Journal, Technium Science, vol. 27(1), pages 463-480, January.
    4. He, Liyu & He, Rong & Evans, Elaine, 2020. "Board influence on a firm’s long-term success: Australian evidence," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).
    5. Hu, Jiamin & Li, Kailun & Xia, Yifei & Zhang, Jianing, 2023. "Gender diversity and financial flexibility: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 90(C).
    6. Rodgers, Waymond & Hudson, Robert & Economou, Fotini, 2023. "Modelling credit and investment decisions based on AI algorithmic behavioral pathways," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    7. Uparna, Jayaram & Bingham, Chris, 2022. "Breaking “Bad”: Negativity’s benefit for entrepreneurial funding," Journal of Business Research, Elsevier, vol. 139(C), pages 1353-1365.
    8. Olapeju Comfort Ogunmokun & Oluwasoye P. Mafimisebi & Demola Obembe, 2023. "Prospect theory and bank credit risk decision-making behaviour: a systematic literature review and future research agenda," SN Business & Economics, Springer, vol. 3(4), pages 1-25, April.

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    More about this item

    Keywords

    Emotion; Gender; Credit decision; Bayesian Net Work; Organizational architecture; Control; Delegation;
    All these keywords.

    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other

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