Discrimination by Microcredit Officers: Theory and Evidence on Disability in Uganda
Université de Mons-Hainaut
Université Libre de Bruxelles (ULB); Université Robert Schuman Strasbourg III
University of Agder
Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) & CERMi
May 30, 2010
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, L3working papers series
Date posted: December 23, 2010 ; Last revised: January 7, 2014
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