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
January 28, 2015
European Banking Center Discussion Paper No. 2012-017
CentER Discussion Paper Series No. 2012-062
We study the effects of own-gender preferences on the supply of and demand for credit using data from a large Albanian lender. Exploiting the quasi-random assignment of borrowers to loan officers we find that 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 receive less favorable loan terms, but do not experience higher arrears. Our results imply that own-gender preferences in the credit market can have substantial welfare effects.
Number of Pages in PDF File: 44
Keywords: Group identity, gender, credit supply, credit demand, loan officers
JEL Classification: G21, G32, J16
Date posted: August 8, 2012 ; Last revised: January 28, 2015