Gender Bias in SME Lending : Experimental Evidence from Turkey
Gender disparities in small and medium-size enterprise lending exist around the world and impede the growth of millions of women-led firms. This paper examines a potential driver of these disparities: gender-biased loan officers. Officer bias is me...
| Main Authors: | , , , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/244611577766368167/Gender-Bias-in-SME-Lending-Experimental-Evidence-from-Turkey http://hdl.handle.net/10986/33120 |
| Summary: | Gender disparities in small and
medium-size enterprise lending exist around the world and
impede the growth of millions of women-led firms. This paper
examines a potential driver of these disparities:
gender-biased loan officers. Officer bias is measured
through a novel loan application experiment conducted with
77 loan officers in Turkish banks. The analysis finds that
35 percent of the loan officers are biased against female
applicants, with women receiving loan amounts $14,000 lower
on average compared with men. Experience in the banking
sector can attenuate this bias, with each year of experience
reducing gender biased loan allocations by 6 percent. The
results suggest that loan officers may use gender bias as a
heuristic device given limited information and risk
aversion. Helping newly recruited and lesser experienced
loan officers to better discern loan application quality may
thus improve financing of business loans to women and reduce
gender gaps in entrepreneurship. |
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