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Lending to women in microfinance: influence of social trust and national culture Lending to women in microfinance: influence of social trust and national culture

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  • Raj Aggarwal
  • John Goodell

Abstract

The preference of microfinance institutions for 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. Controlling for the social outreach goals of MFIs, we document that MFIs favor women more in low trust countries, suggesting that women are targeted to offset low social trust. We also examine how the nature of trust formation affects this relationship between gender targeting and trust. Our results should be of considerable interest to policymakers and scholars.

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  • Raj Aggarwal & John Goodell, 2013. "Lending to women in microfinance: influence of social trust and national culture Lending to women in microfinance: influence of social trust and national culture," Working Papers (Old Series) 1317, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:1317
    DOI: 10.26509/frbc-wp-201317
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    More about this item

    JEL classification:

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

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