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Microfinance and Gender: Is There a Glass Ceiling on Loan Size?

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  • Agier, Isabelle
  • Szafarz, Ariane

Abstract

Most of the customers of microfinance institutions are female. But do men and women benefit from the same credit conditions? We investigate this issue by presenting an original model and testing its predictions on an exceptional database comprising 34,000 loan applications from a Brazilian microfinance institution. The model determines the optimal loan size fixed by a gender-biased lender, depending on the borrower’s creditworthiness and the intensity of the lender’s bias. The empirical analysis detects no gender bias in loan denial, but uncovers disparate treatment with regard to credit conditions. In particular, we find a “glass ceiling” effect. The gender gap in loan size increases disproportionately with respect to the scale of the borrower’s project. The results are insensitive to the loan officer’s gender.

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  • Agier, Isabelle & Szafarz, Ariane, 2013. "Microfinance and Gender: Is There a Glass Ceiling on Loan Size?," World Development, Elsevier, vol. 42(C), pages 165-181.
    • Handle: RePEc:eee:wdevel:v:42:y:2013:i:c:p:165-181
    DOI: 10.1016/j.worlddev.2012.06.016
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    More about this item

    Keywords

    microcredit; microfinance; gender discrimination; women entrepreneurs; Latin America; Brazil;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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