Credit Officers and Loan Granting in Microfinance: Brazilian Evidence

15 Pages Posted: 23 Dec 2010

See all articles by Isabelle Agier

Isabelle Agier

Université Paris I Panthéon Sorbonne, UMR 201; Université libre de Bruxelles, CERMi

Ariane Szafarz

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) & CERMi

Date Written: December 21, 2010

Abstract

In microcredit institutions, credit officers play a prominent role in loan granting decisions. Indeed, they collect field data, meet with the applicants, and provide personal recommendations to the credit committee that takes the final decisions (loan approval/denial, and loan size). This paper offers the first precise quantification of the degree of influence of the credit officers on the final decision making. Based on a detailed database from a Brazilian microcredit institution, we are able scrutinize the process that drives the determination of loan size within the institution. The partiality of the credit officers is analyzed through the lens of gender bias, providing a measure of the extent of the agency problem at stake. The results show that there is indeed a gender gap in loan size generated by the MFI, and that this gap is almost exclusively attributable the credit officers. In conclusion, this paper confirms that, despite monitoring, the credit officers remain by far the dominant decision-makers in microloan granting.

Keywords: Microcredit, Gender, Credit Officer, Loan Size, Allocation Process

JEL Classification: O16, D82, J33, L31

Suggested Citation

Agier, Isabelle and Szafarz, Ariane, Credit Officers and Loan Granting in Microfinance: Brazilian Evidence (December 21, 2010). Available at SSRN: https://ssrn.com/abstract=1729234 or http://dx.doi.org/10.2139/ssrn.1729234

Isabelle Agier (Contact Author)

Université Paris I Panthéon Sorbonne, UMR 201 ( email )

IEDES, 45 bis avenue de la Belle Gabrielle
Nogent sur Marne, 94736
France

Université libre de Bruxelles, CERMi

Avenue F.D. Roosevelt 21 - CP145/1
Brussels, B-1050
Belgium

Ariane Szafarz

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) & CERMi ( email )

50 Avenue Roosevelt
Brussels 1050
Belgium

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