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Gender Biases in Bank Lending: Lessons from Microcredit in France

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  • Anastasia Cozarenco

    (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier)

  • Ariane Szafarz

    (Université Libre de Bruxelles - ULB - Université Libre de Bruxelles [Bruxelles])

Abstract

The evidence on gender discrimination in lending remains controversial. To capture gender biases in banks' loan allocations, we observe the impact on the applicants of a microfinance institution (MFI) and exploit the natural experiment of a regulatory change imposing a strict EUR 10,000 loan ceiling on microcredit. Descriptive statistics indicate that the presence of the ceiling is associated both with bank-MFI co-financing and with harsher treatment of female borrowers. To investigate causal links, we develop an econometric approach that addresses the concerns of selection biases, multicollinearity, and endogeneity. Our empirical findings suggest that the change in the MFI's gender-related attitude was triggered by banks through co-financing. Hence, we speculate that co-financing pushes ceiling-constrained MFIs to import whatever biases in loan granting that the banks are prone to. Overall, this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women's empowerment efforts made by MFIs.

Suggested Citation

  • Anastasia Cozarenco & Ariane Szafarz, 2018. "Gender Biases in Bank Lending: Lessons from Microcredit in France," Post-Print hal-02049949, HAL.
  • Handle: RePEc:hal:journl:hal-02049949
    Note: View the original document on HAL open archive server: https://hal.umontpellier.fr/hal-02049949
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    Cited by:

    1. repec:eee:jbvent:v:33:y:2018:i:6:p:813-831 is not listed on IDEAS
    2. Carolina Laureti, 2017. "Why do Poor People Co-hold Debt and Liquid Savings?," Working Papers CEB 17-007, ULB -- Universite Libre de Bruxelles.
    3. Supriya Garikipati & Susan Johnson & Isabelle Guérin & Ariane Szafarz, 2017. "Microfinance and Gender: Issues, Challenges and The Road Ahead," Journal of Development Studies, Taylor & Francis Journals, vol. 53(5), pages 641-648, May.
    4. Anastasia Cozarenco & Ariane Szafarz, 2016. "Microcredit in Industrialized Countries: Unexpected Consequences of Regulatory Loan Ceilings," Working Papers CEB 16-021, ULB -- Universite Libre de Bruxelles.

    More about this item

    Keywords

    France; Microcredit; Bank; Gender; Loan ceiling;

    JEL classification:

    • 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
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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