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

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

Abstract

This paper studies the relationship between a microfinance institution and its credit officers when the latter are biased against a subgroup of the clientele. 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 discriminatory credit officer. Since incentives are costly, and the MFI’s budget is limited, even a non discriminating welfare-maximizing MFI may prefer paying smaller incentives, and letting its credit officer discriminate to some extent.

Suggested Citation

  • Marc Labie & Pierre-Guillaume Méon & Roy Mersland & Ariane Szafarz, 2010. "Discrimination by Microcredit Officers: Theory and Evidence on Disability in Uganda," Working Papers CEB 10-007.RS, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:10-007
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    More about this item

    Keywords

    Microfinance; Discrimination; Credit Officers; Incentives.;
    All these keywords.

    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

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