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Gender Bias in SME Lending : Experimental Evidence from Turkey

Author

Listed:
  • Alibhai,Salman
  • Donald,Aletheia Amalia
  • Goldstein,Markus P.
  • Oguz,Alper Ahmet
  • Pankov,Alexander
  • Strobbe,Francesco

Abstract

Gender disparities in small and medium-size enterprise lending exist around the world and impede the growth of millions of women-led firms. This paper examines a potential driver of these disparities: gender-biased loan officers. Officer bias is measured through a novel loan application experiment conducted with 77 loan officers in Turkish banks. The analysis finds that 35 percent of the loan officers are biased against female applicants, with women receiving loan amounts $14,000 lower on average compared with men. Experience in the banking sector can attenuate this bias, with each year of experience reducing gender biased loan allocations by 6 percent. The results suggest that loan officers may use gender bias as a heuristic device given limited information and risk aversion. Helping newly recruited and lesser experienced loan officers to better discern loan application quality may thus improve financing of business loans to women and reduce gender gaps in entrepreneurship.

Suggested Citation

  • Alibhai,Salman & Donald,Aletheia Amalia & Goldstein,Markus P. & Oguz,Alper Ahmet & Pankov,Alexander & Strobbe,Francesco, 2019. "Gender Bias in SME Lending : Experimental Evidence from Turkey," Policy Research Working Paper Series 9100, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9100
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    Cited by:

    1. Arandara,Tisarani Rathnija & Gunasekera,Shanuki, 2020. "Financial Inclusion and Inclusive Growth : What Does It Mean for Sri Lanka?," Policy Research Working Paper Series 9204, The World Bank.
    2. J. Michelle Brock & Ralph De Haas, 2023. "Discriminatory Lending: Evidence from Bankers in the Lab," American Economic Journal: Applied Economics, American Economic Association, vol. 15(2), pages 31-68, April.
    3. De, Anusha & Miehe, Caroline & Van Campenhout, Bjorn, 2024. "Gender bias in customer perceptions: The case of agro-input dealers in Uganda," Agricultural Systems, Elsevier, vol. 217(C).
    4. Vojtech Bartos & Silvia Castro & Kristina Czura & Timm Opitz, 2023. "Gendered Access to Finance: The Role of Team Formation, Idea Quality, and Implementation Constraints in Business Evaluations," Rationality and Competition Discussion Paper Series 473, CRC TRR 190 Rationality and Competition.

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