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Are credit screening contracts designed for men?

Author

Listed:
  • Irene Comeig

    (University of Valencia)

  • Ainhoa Jaramillo-Gutiérrez

    (UJI)

  • Federico Ramírez

    (University of Valencia)

Abstract

Access to credit is key to succeed in business. Theoretical models of credit under asymmetric information classify borrowers and grant or deny credit, typically based on incentive-compatible contracts with collateral. However, if women are particularly risk averse, female borrowers may be wrongly classified and denied credit. We conduct in three countries a laboratory experiment to study this systematic gender difference. Results show that incentive-compatible contracts with collateral fail to disclose women’s private information, while disclosing men’s private information. We suggest that banks should incorporate the gender difference in risk attitudes to avoid the glass ceiling in women’s access to credit.

Suggested Citation

  • Irene Comeig & Ainhoa Jaramillo-Gutiérrez & Federico Ramírez, 2022. "Are credit screening contracts designed for men?," Service Business, Springer;Pan-Pacific Business Association, vol. 16(4), pages 883-905, December.
    • Handle: RePEc:spr:svcbiz:v:16:y:2022:i:4:d:10.1007_s11628-022-00485-w
    DOI: 10.1007/s11628-022-00485-w
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    More about this item

    Keywords

    Behavioral finance; Credit screening; Entrepreneurship; Experiments; Gender;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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