Journal of Business Ethics

, Volume 147, Issue 3, pp 631–650 | Cite as

Gender Biases in Bank Lending: Lessons from Microcredit in France

  • Anastasia CozarencoEmail author
  • Ariane Szafarz


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.


Microcredit 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”.


  1. Agier, I., & Szafarz, A. (2013a). Microfinance and gender: Is there a glass ceiling on loan size? World Development, 42, 165–181.CrossRefGoogle Scholar
  2. Agier, I., & Szafarz, A. (2013b). Subjectivity in credit allocation to micro-entrepreneurs: Evidence from Brazil. Small Business Economics, 41, 263–275.CrossRefGoogle Scholar
  3. Alesina, A. F., Lotti, F., & Mistrulli, P. E. (2013). Do women pay more for credit? Evidence from Italy. Journal of the European Economic Association, 11, 45–66.CrossRefGoogle Scholar
  4. Ananth, B. (2005). Financing microfinance: The ICICI bank partnership model. Small Enterprise Development, 16, 57–65.CrossRefGoogle Scholar
  5. Andersen, T. B., & Malchow-Møller, N. (2006). Strategic interaction in undeveloped credit markets. Journal of Development Economics, 80, 275–298.CrossRefGoogle Scholar
  6. Armendariz, B., & Morduch, J. (2010). The economics of microfinance (2nd ed.). Cambridge, MA: MIT Press.Google Scholar
  7. Armendariz, B., & Szafarz, A. (2011). On mission drift in microfinance institutions. In B. Armendariz & M. Labie (Eds.), The handbook of microfinance (pp. 341–366). London-Singapore: World Scientific Publishing.CrossRefGoogle Scholar
  8. Aubert, C., de Janvry, A., & Sadoulet, E. (2009). Designing credit agent incentives to prevent mission drift in pro-poor microfinance institutions. Journal of Development Economics, 90, 153–162.CrossRefGoogle Scholar
  9. Bagus, P., Gabriel, A., & Howden, D. (2015). Reassessing the ethicality of some common financial practices. Journal of Business Ethics, 10, 1–10.Google Scholar
  10. Beaman, L., Chattopadhyay, R., Duflo, E., Pande, R., & Topalova, P. (2009). Powerful women: Does exposure reduce bias? Quarterly Journal of Economics, 124, 1497–1540.CrossRefGoogle Scholar
  11. Bellucci, A., Borisov, A., & Zazzaro, A. (2010). Does gender matter in bank-firm relationships? Evidence from small business lending. Journal of Banking & Finance, 34, 2968–2984.CrossRefGoogle Scholar
  12. Bennardo, A., Pagano, M., & Piccolo, S. (2015). Multiple bank lending, creditor rights and information sharing. Review of Finance, 19, 519–570.CrossRefGoogle Scholar
  13. Berger, A. N., & Udell, G. F. (2002). The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle. Journal of Banking & Finance, 22, 613–673.CrossRefGoogle Scholar
  14. Bernard, C., Le Moign, C. and Nicolaï, J.-P. (2013). L’Entrepreneuriat Féminin. Centre d’Analyse Stratégique, Working Paper 2013-06.Google Scholar
  15. Bertrand, M., & Mullainathan, S. (2004). Are emily and greg more employable than Lakisha and Jamal? A field experiment on labor market discrimination. American Economic Review, 94, 991–1013.CrossRefGoogle Scholar
  16. Blanchard, L., Zhao, B., & Yinger, J. (2008). Do lenders discriminate against minority and woman entrepreneurs? Journal of Urban Economics, 63, 467–497.CrossRefGoogle Scholar
  17. Blanchflower, D. G., Levine, P. B., & Zimmerman, D. J. (2003). Discrimination in the small-business credit market. Review of Economics and Statistics, 85, 930–943.CrossRefGoogle Scholar
  18. Bøhren, Ø., & Staubo, S. (2014). Does mandatory gender balance work? Changing organizational form to avoid board upheaval. Journal of Corporate Finance, 28, 152–168.CrossRefGoogle Scholar
  19. Brabant, M., Dugos, P., & Massou, F. (2009). Rapport sur le Microcrédit. Inspection Générale des Finances.Google Scholar
  20. Brana, S. (2013). Microcredit: An answer to the gender problem in funding? Small Business Economics, 40, 87–100.CrossRefGoogle Scholar
  21. Carter, S., Shaw, E., Lam, W., & Wilson, F. (2007). Gender, entrepreneurship, and bank lending: The criteria and processes used by bank loan officers in assessing applications. Entrepreneurship Theory and Practice, 31, 427–444.CrossRefGoogle Scholar
  22. Cavalluzzo, K. S., Cavalluzzo, L. C., & Wolken, J. D. (2002). Competition, small business financing, and discrimination: Evidence from a new survey. Journal of Business, 75, 641–679.CrossRefGoogle Scholar
  23. Cavalluzzo, K. S., & Wolken, J. D. (2005). Small business loan turndowns, and discrimination. Journal of Business, 78, 2153–2177.CrossRefGoogle Scholar
  24. Coleman, S. (2000). Access to capital and terms of credit: A comparison of men- and women-owned small businesses. Journal of Small Business Management, 38, 37–52.Google Scholar
  25. Cornée, S., & Szafarz, A. (2014). Vive la Différence: Social banks and reciprocity in the credit market. Journal of Business Ethics, 125, 361–380.CrossRefGoogle Scholar
  26. Cozarenco, A., & Szafarz, A. (2013). Microcredit in developed countries: Unexpected consequences of loan-size ceilings, SSRN.
  27. Cull, R., Demirgüç-Kunt, A., & Morduch, J. (2011). Does regulatory supervision curtail microfinance profitability and outreach? World Development, 39, 949–965.CrossRefGoogle Scholar
  28. D’Espallier, B., Guérin, I., & Mersland, R. (2011). Women and repayment in microfinance: A global analysis. World Development, 39, 758–772.CrossRefGoogle Scholar
  29. Degryse, H., Lu, L., & Ongena, S. (2013). Informal or formal financing? Or both? First evidence on the co-funding of Chinese firms. SSRN. or
  30. Fay, M., & Williams, L. (1993). Gender bias and the availability of business loans. Journal of Business Venturing, 8, 363–376.CrossRefGoogle Scholar
  31. Field, E., Holland, A., & Pande, R. (2014). Microfinance: Points of Promise. In J. Kimmel (Ed.), Contemporary and Emerging Issues. W.E. Upjohn Institute for Employment Research, forthcoming.Google Scholar
  32. Garikipati, S. (2008). The impact of lending to women on household vulnerability and women’s empowerment: Evidence from India. World Development, 36, 2620–2642.CrossRefGoogle Scholar
  33. Guérin, I. (2011). The gender of finance and lessons for microfinance. In B. Armendariz & M. Labie (Eds.), The handbook of microfinance (pp. 589–612). London-Singapore: World Scientific Publishing.CrossRefGoogle Scholar
  34. Guérin, I., Roesch, M., Venkatasubramanian, G., & Kumar, S. (2013). The Social meaning of over-indebtedness and creditworthiness in the context of poor rural South Indian households (Tamil Nadu). In Guérin, I., S. Morvant-Roux & M. Villarreal (Eds.), Microfinance, debt and over-indebtedness. Juggling with money (pp. 125–150). London: Routledge.Google Scholar
  35. Gutiérrez-Nieto, B., Serrano-Cinca, C., & Camón-Cala, J. (2014). A credit score system for socially responsible lending. Journal of Business Ethics, 10, 1–11.Google Scholar
  36. Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica, 47, 153–161.CrossRefGoogle Scholar
  37. Hudon, M., & Traça, D. (2011). On the efficiency effects of subsidies in microfinance: An empirical inquiry. World Development, 39, 966–973.CrossRefGoogle Scholar
  38. Jain, S. (1999). Symbiosis versus crowding-out: The interaction of formal and informal credit markets in developing countries. Journal of Development Economics, 59, 419–444.CrossRefGoogle Scholar
  39. Johnson, S. (2014). Why the gender dummy doesn’t speak: Explaining the gender gap in financial inclusion. Center for Financial Inclusion Blog.
  40. Johnson, S., & Nino-Zarazua, M. (2011). Financial access and exclusion in Kenya and Uganda. Journal of Development Studies, 47, 475–496.CrossRefGoogle Scholar
  41. Ladd, H. F. (1998). Evidence on discrimination in mortgage lending. Journal of Economic Perspectives, 12, 41–62.CrossRefGoogle Scholar
  42. Orser, B., Hogarth-Scott, S., & Riding, A. (2000). Performance, firm size, and management problem solving. Journal of Small Business Management, 38, 42–58.Google Scholar
  43. Riding, A., & Swift, C. (1990). Women business owners and terms of credit: Some empirical findings of the Canadian experience. Journal of Business Venturing, 5, 327–340.CrossRefGoogle Scholar
  44. Storey, D. J. (2004). Racial and gender discrimination in the micro firms credit market? Evidence from Trinidad and Tobago. Small Business Economics, 23, 401–422.CrossRefGoogle Scholar
  45. Vanroose, A., & D’Espallier, B. (2013). Do microfinance institutions accomplish their mission? Evidence from the relationship between traditional financial sector development and microfinance institutions’ outreach and performance. Applied Economics, 45, 1965–1982.CrossRefGoogle Scholar
  46. Wilson, F. (2015). Making loan decisions in banks: Straight from the gut? Journal of Business Ethics, 24, 1–11.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  1. 1.Montpellier Business School, Montpellier Research in ManagementMontpellier cedex 4France
  2. 2.Université Libre de Bruxelles (ULB), SBS-EM, Centre Emile Bernheim, and CERMiBrusselsBelgium

Personalised recommendations