The gender gaps in informal loan markets

This paper estimates gender gaps in accessing and using informal loans, along with the prevalence of unethical practices associated with these loans, using unique individual-level survey data from Thailand. The analysis provides three main findings. First, there is no significant overall gender gap in the likelihood of obtaining informal loans, but gender gaps emerge across occupations, with gaps of 6.1 and −4.0 percentage points for private-sector employees and the self-employed, respectively. Women borrow approximately 20 percent less than men and pay interest rates that are 5.4 percentage points higher. Second, women are 5.9 percentage points more likely to use informal loans for business investments and 5.0 percentage points less likely to use them for necessary expenses. Third, women are more inclined to borrow from in-area private lenders and loan sharks, facing a likelihood of physical threats that is 3.4 percentage points higher, but a likelihood of predatory contracts that is 1.5 percentage points lower. These findings highlight the need for greater financial inclusion and address the social challenges of violence within Thailand’s informal loan markets.