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Discrimination by Microcredit Officers: Theory and Evidence on Disability in UgandaMarc Labieaffiliation not provided to SSRN Pierre-Guillaume MeonUniversité Libre de Bruxelles (ULB); Université Robert Schuman Strasbourg III Roy MerslandUniversity of Agder Ariane SzafarzUniversité Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) & CERMi May 30, 2010 Abstract: This paper studies the relationship between a microfinance institution (MFI) 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 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.
Number of Pages in PDF File: 25 Keywords: Microfinance, Discrimination, Credit Officers, Incentives JEL Classification: G21, O16, J33, L3 working papers seriesDate posted: December 23, 2010 ; Last revised: December 27, 2010Suggested CitationContact Information
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