Sex and Credit: Is There A Gender Bias In Lending?

T.H.L. Beck, P. Behr, A. Madestam

Research output: Working paperDiscussion paperOther research output

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Abstract

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 gender 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.
Original languageEnglish
Place of PublicationTilburg
PublisherEBC
Number of pages50
Volume2012-017
Publication statusPublished - 2012

Publication series

NameEBC Discussion Paper
Volume2012-017

Fingerprint

Lending
Gender bias
Credit
Loans
Credit markets
Arrears
Welfare effects
Financial markets
Conditionality
Interest rates
Random assignment
Market competition
Discretion

Keywords

  • Group identity
  • gender
  • credit supply
  • credit demand
  • loan officers

Cite this

Beck, T. H. L., Behr, P., & Madestam, A. (2012). Sex and Credit: Is There A Gender Bias In Lending? (EBC Discussion Paper; Vol. 2012-017). Tilburg: EBC.
Beck, T.H.L. ; Behr, P. ; Madestam, A. / Sex and Credit : Is There A Gender Bias In Lending?. Tilburg : EBC, 2012. (EBC Discussion Paper).
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Beck, THL, Behr, P & Madestam, A 2012 'Sex and Credit: Is There A Gender Bias In Lending?' EBC Discussion Paper, vol. 2012-017, EBC, Tilburg.

Sex and Credit : Is There A Gender Bias In Lending? / Beck, T.H.L.; Behr, P.; Madestam, A.

Tilburg : EBC, 2012. (EBC Discussion Paper; Vol. 2012-017).

Research output: Working paperDiscussion paperOther research output

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AB - 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 gender 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.

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Beck THL, Behr P, Madestam A. Sex and Credit: Is There A Gender Bias In Lending? Tilburg: EBC. 2012. (EBC Discussion Paper).