Sex and Credit: Is There a Gender Bias in Lending?
City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER
Brazilian School of Public and Business Administration
Stockholm University, Department of Economics
June 4, 2013
European Banking Center Discussion Paper No. 2012-017
CentER Discussion Paper Series No. 2012-062
We exploit the quasi-random assignment of borrowers to loan officers using data from a large Albanian lender to show that own-gender preferences affect both credit supply and demand. Borrowers matched to officers of the opposite sex are less likely to return for a second loan. The effect is larger when officers have little prior exposure to borrowers of the other gender and when they have more discretion to act on their gender beliefs, as proxied by financial market competition and branch size. We examine one channel of influence, loan conditionality. Borrowers assigned to opposite-sex officers pay higher interest rates and receive lower loan amounts, but do not experience higher arrears. Our results imply that own-gender preferences in the credit market can have substantial negative welfare effects.
Number of Pages in PDF File: 52
Keywords: Group identity, gender, credit supply, credit demand, loan officers
JEL Classification: G21, G32, J16working papers series
Date posted: August 8, 2012 ; Last revised: June 4, 2013
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