25 Pages Posted: 23 Dec 2010 Last revised: 7 Jan 2014
Date Written: 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.
Keywords: Microfinance, Discrimination, Credit Officers, Incentives
JEL Classification: G21, O16, J33, L3
Suggested Citation: Suggested Citation
Labie, Marc and Meon, Pierre-Guillaume and Mersland, Roy and Szafarz, Ariane, Discrimination by Microcredit Officers: Theory and Evidence on Disability in Uganda (May 30, 2010). Available at SSRN: https://ssrn.com/abstract=1722122 or http://dx.doi.org/10.2139/ssrn.1722122
By Roy Mersland