Gender Discrimination in Small Business Lending. Evidence from a Lab in-the-Field Experiment in Turkey

46 Pages Posted: 11 Sep 2019

See all articles by J. Michelle Brock

J. Michelle Brock

European Bank for Reconstruction and Development (EBRD)

Ralph De Haas

European Bank for Reconstruction and Development; Centre for Economic Policy Research (CEPR); Tilburg University - Department of Finance

Date Written: September 10, 2019

Abstract

We test for the presence of gender discrimination in small business lending through a lab-in-the-field experiment with 334 Turkish loan officers. Each officer reviews multiple loan applications in which we randomize the applicant’s gender. While unconditional approval rates are the same for male and female applicants, we detect a more subtle form of discrimination. Loan officers are 30 percent more likely to make loan approval conditional on the presence of a guarantor when we present an application as coming from a female instead of a male entrepreneur. This gender discrimination is concentrated among young, inexperienced, and gender-biased loan officers. Discrimination is also most pronounced for loans that perform well in real life, making it costly to the bank. Experimental variation in the available applicant information does not impact lending decisions, suggesting that the nature of discrimination is implicit rather than statistical.

Keywords: Gender discrimination; guarantors; implicit bias; lab-in-the-field; bank lending

JEL Classification: D81; D83; D91; G21; G41; L26

Suggested Citation

Brock, J. Michelle and De Haas, Ralph, Gender Discrimination in Small Business Lending. Evidence from a Lab in-the-Field Experiment in Turkey (September 10, 2019). EBRD Working Paper No. 232. Available at SSRN: https://ssrn.com/abstract=3451337 or http://dx.doi.org/10.2139/ssrn.3451337

J. Michelle Brock (Contact Author)

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom

Ralph De Haas

European Bank for Reconstruction and Development ( email )

One Exchange Square
London, EC2A 2JN
United Kingdom

HOME PAGE: www.ebrd.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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