Decomposing Gender Differences in Bankcard Credit Limits

In this paper, we examine if there are gender differences in total bankcard limits by utilizing a data set that links mortgage applicant information with individual-level credit bureau data from 2006 - 2016. We document that after controlling for credit score, income, and demographic characteristics, male borrowers on average have higher total bankcard limits than female borrowers. Using a standard Kitagawa-Oaxaca-Blinder decomposition, we find that 87 percent of the gap is explained by differences in the effect of observed characteristics between male and female borrowers, while approximately 10 percent of the difference can be explained by differences in the levels of observed characteristics. Using a quantile decomposition strategy to analyze the gender gap along the entire bankcard credit limit distribution, we show that gender differences in bankcard limits favor female borrowers at smaller limits and favor male borrowers at larger limits. The primary factors that drive this gap have changed over time and vary across the distribution of credit limits.