Gender Biases in Bank Lending: Lessons from Microcredit in France
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The evidence on gender discrimination in lending remains controversial. To capture gender biases in banks’ loan allocations, we observe the impact on the applicants of a microfinance institution (MFI) and exploit the natural experiment of a regulatory change imposing a strict EUR 10,000 loan ceiling on microcredit. Descriptive statistics indicate that the presence of the ceiling is associated both with bank-MFI co-financing and with harsher treatment of female borrowers. To investigate causal links, we develop an econometric approach that addresses the concerns of selection biases, multicollinearity, and endogeneity. Our empirical findings suggest that the change in the MFI’s gender-related attitude was triggered by banks through co-financing. Hence, we speculate that co-financing pushes ceiling-constrained MFIs to import whatever biases in loan granting that the banks are prone to. Overall, this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women’s empowerment efforts made by MFIs.
KeywordsMicrocredit Bank Loan ceiling Gender France
The authors thank Renaud Bourlès, Olivier Chanel, Habiba Djebbari, Supriya Garikipati, Isabelle Guérin, Susan Johnson, Robert Lensink, Thierry Magnac, Marc Sangnier, and the participants in the “Microfinance and Women’s Empowerment: The Road Ahead” workshop (Liverpool, July 2013) for valuable comments. The two authors benefited from the financial support of the “Interuniversity Attraction Pole” on social enterprise, funded by the Belgian Science Policy Office. Anastasia Cozarenco is member of the Labex Chair “Entrepreneurship & Innovation”.
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