Sex and Credit: Is There a Gender Bias in Lending?

European Banking Center Discussion Paper No. 2011-027

CentER Working Paper Series No. 2011-101

49 Pages Posted: 7 Sep 2011 Last revised: 1 Aug 2012

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Patrick Behr

Getulio Vargas Foundation (FGV) - Brazilian School of Public and Business Administration (EBAPE)

Andreas Madestam

Stockholm University, Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 7, 2011

Abstract

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. Together our results imply that own-gender preferences in the credit market can have substantial welfare effects.

Keywords: G21, G32, J16

JEL Classification: Group identity, gender, credit supply, credit demand, loan officers.

Suggested Citation

Beck, Thorsten and Behr, Patrick and Madestam, Andreas, Sex and Credit: Is There a Gender Bias in Lending? (September 7, 2011). European Banking Center Discussion Paper No. 2011-027. Available at SSRN: https://ssrn.com/abstract=1923649 or http://dx.doi.org/10.2139/ssrn.1923649

Thorsten Beck

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Patrick Behr (Contact Author)

Getulio Vargas Foundation (FGV) - Brazilian School of Public and Business Administration (EBAPE) ( email )

Brazil

Andreas Madestam

Stockholm University, Department of Economics ( email )

Universitetsvägen 10
Stockholm, Stockholm SE-106 91
Sweden

HOME PAGE: http://www.ne.su.se/andreasmadestam

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