Attention Constraints and Financial Inclusion

Bo Huang, Jiacui Li, Tse-Chun Lin, Mingzhu Tai and Zoey Yiyuan Zhou

Journal of Financial and Quantitative Analysis, 2025, vol. 60, issue 4, 1727-1759

Abstract: We show that attention constraints on decision-makers create barriers to financial inclusion. Using administrative data on retail loan-screening processes, we find that attention-constrained loan officers exert less effort reviewing applicants of lower socioeconomic status (SES) and reject them more frequently. More importantly, when externally imposed increases in loan officers’ workloads tighten attention constraints, loan officers are even more prone to quickly reject low-SES applicants but quickly accept very high-SES applicants without careful review. Such selective attention allocation further widens the approval rate gap between high- and low-SES applicants—a unique prediction of this attention-based mechanism.

Date: 2025
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