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Credit risk in the microfinance industry: The role of gender affinity

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  • Antonio Blanco-Oliver
  • Nuria Reguera-Alvarado
  • Gianluca Veronesi

Abstract

This study explores the role played by gender in lending transactions and specifically its effects on the loan portfolio credit risk of microfinance institutions (MFIs). Using a multicountry data set of developing countries, where MFIs mainly operate, the analysis shows that a higher proportion of female loan officers increases the loan portfolio at risk. Nonetheless, we also find that this positive relationship is negatively mediated by the gender affinity between female loan officers and female borrowers. Gender affinity suggests that female loan officers are more likely to lend to female borrowers, and this reduces the default rate of loans offered by MFIs.

Suggested Citation

  • Antonio Blanco-Oliver & Nuria Reguera-Alvarado & Gianluca Veronesi, 2021. "Credit risk in the microfinance industry: The role of gender affinity," Journal of Small Business Management, Taylor & Francis Journals, vol. 59(2), pages 280-311, March.
    • Handle: RePEc:taf:ujbmxx:v:59:y:2021:i:2:p:280-311
    DOI: 10.1080/00472778.2020.1844487
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    Cited by:

    1. Moez Bennouri & Anastasia Cozarenco & Samuel Anokye Nyarko, 2024. "Women on Boards and Performance Trade-offs in Social Enterprises: Insights from Microfinance," Journal of Business Ethics, Springer, vol. 190(1), pages 165-198, February.
    2. F. S. Fall & H. Tchakoute Tchuigoua & A. Vanhems & L. Simar, 2023. "Investigating the unobserved heterogeneity effect on outreach to women: lessons from microfinance institutions," Annals of Operations Research, Springer, vol. 328(2), pages 1365-1386, September.
    3. Abiodun Omidiji & Nives Botica Redmayne & Dimu Ehalaiye & Ernest Gyapong, 2024. "Internal audit in microfinance institutions‐ evidence from transitional and developing economies," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 32(1), pages 109-141, January.
    4. Blanco-Oliver, A.J. & Irimia-Diéguez, A.I. & Vázquez-Cueto, M.J., 2023. "Is there an optimal microcredit size to maximize the social and financial efficiencies of microfinance institutions?," Research in International Business and Finance, Elsevier, vol. 65(C).
    5. Salvador Cruz Rambaud & Joaquín López Pascual & Roberto Moro-Visconti & Emilio M. Santandreu, 2022. "Should gender be a determinant factor for granting crowdfunded microloans?," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-13, December.
    6. Hubert Tchakoute Tchuigoua, 2023. "Loan officer gender and loan repayment performance. Evidence from greenfield microfinance institutions in Cameroon1," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(2), pages 519-548, June.

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