DP14340 Gender Discrimination in Lending: Evidence from Bankers in the Lab

Author(s): Michelle Brock, Ralph de Haas
Publication Date: January 2020
Keyword(s): banks, Gender Discrimination, guarantors, Implicit bias, lab-in-the-field
JEL(s): D81, D83, D91, G21
Programme Areas: Financial Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14340

We implement a lab-in-the-field experiment with 334 Turkish loan officers to test for the presence of gender discrimination in small business lending. 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 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 discrimination is implicit rather than statistical.