Incentivizing Inclusion: Experimental Evidence on Lending to Women-Led Firms in Viet Nam

In much of Asia, small and medium-sized enterprises that are owned or led by women (WSMEs) face more difficulties accessing credit than those owned or led by men. This raises the question of how to change employee behavior within lending institutions to extend credit to WSME borrowers. There is little empirical evidence on incentive effectiveness from high-stakes, field experimental settings with workers completing complex, open-ended tasks. In collaboration with a leading Vietnamese commercial bank, we evaluate the impact of two incentives for lending agents to increase recruitment of WSMEs as new borrowing clients. A total of 50 bank branches employing hundreds of lending staff are randomly assigned to one of the following treatments for 6 months: (i) a monthly multi-category contest; (ii) piece-rate incentives; or (iii) control. We find that, while any treatment increases new WSME lending by 40%, the contest, in particular, causes an increase in new WSME lending of 58%, with stronger effects among female lending agents and in urban branches. This does not induce strategic reductions in loan size, displace lending to comparable non-WSMEs, or cause lower loan quality (higher delinquency). This suggests there is room for expanded financial incentives for lending agents to extend credit to underserved groups without loss of other business.