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Lending to women in microfinance: Role of social trust

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  • Aggarwal, Raj
  • Goodell, John W.
  • Selleck, Lauren J.

Abstract

Microfinance institutions’ (MFIs) preference for women borrowers varies internationally and the MFI focus on women borrowers is generally attributed to two reasons: women borrowers are more trustworthy and have greater social impact. However, the role of social trust with regard to this gender preference has not been adequately investigated. We document that MFIs favor women more in low trust countries and in countries where social trust formation is primarily behavioral. We interpret these findings as consistent with gender targeting being used as a substitute for social trust. Our results should be of considerable interest to policy-makers, managers, and scholars.

Suggested Citation

  • Aggarwal, Raj & Goodell, John W. & Selleck, Lauren J., 2015. "Lending to women in microfinance: Role of social trust," International Business Review, Elsevier, vol. 24(1), pages 55-65.
  • Handle: RePEc:eee:iburev:v:24:y:2015:i:1:p:55-65
    DOI: 10.1016/j.ibusrev.2014.05.008
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    Cited by:

    1. Rolando Gonzales & Gabriela Aguilera-Lizarazu & Andrea Rojas-Hosse & Patricia Aranda, 2016. "Preference for women but less preference for indigenous women: A lab-field experiment of loan discrimination in a developing economy," Working Papers PIERI 2016-24, PEP-PIERI.
    2. Jeremy Greenwood & Juan M. Sanchez & Cheng Wang, 2010. "Financing Development: The Role of Information Costs," American Economic Review, American Economic Association, vol. 100(4), pages 1875-1891, September.
    3. repec:eaa:eerese:v:17:y2017:i:2_4 is not listed on IDEAS
    4. repec:eee:intfin:v:53:y:2018:i:c:p:307-319 is not listed on IDEAS
    5. repec:jdm:journl:v:12:y:2017:i:6:p:584-595 is not listed on IDEAS
    6. Goodell, John W., 2016. "Do for-profit universities induce bad student loans?," The Quarterly Review of Economics and Finance, Elsevier, vol. 61(C), pages 173-184.

    More about this item

    Keywords

    Access to finance; Banking; Economic development; Financing; Gender development; Gender discrimination; National culture; Social trust;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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