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Discrimination by Microcredit Officers:Theory and Evidence on Disability in Uganda

Author

Listed:
  • Pierre-Guillaume Méon
  • Roy Mersland
  • Ariane Szafarz
  • Marc Labie

Abstract

This paper studies the relationship between a microfinance institution (MFI) and its credit officers when the latter discriminate against a group of the target population. Using survey data from Uganda, we provide evidence that credit officers are more biased against disabled borrowers than other employees. In line with the evidence, we then build an agency model of a non-profit MFI and a discriminating credit officer. Since incentive schemes are costly and the MFI’s budget is limited, even a non-discriminating welfare-maximizing MFI may prefer paying smaller incentivizing compensation, and letting its credit officer discriminate to some extent.

Suggested Citation

  • Pierre-Guillaume Méon & Roy Mersland & Ariane Szafarz & Marc Labie, 2011. "Discrimination by Microcredit Officers:Theory and Evidence on Disability in Uganda," DULBEA Working Papers 11-06, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:dul:wpaper:2013/87194
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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