Subjectivity in Credit Allocation to Micro-Entrepreneurs: Evidence from Brazil

Isabelle Agier and Ariane Szafarz

No 11-016, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: This paper estimates the impact of loan officers' subjectivity on microcredit granting by exploiting an exceptionally detailed database from a Brazilian microfinance institution. Loan officers collect field data, meet with applicants, and make recommendations to the credit committee that in turn has the final say on both loan approval and loan size. The loan officers' subjectivity is captured through the lens of disparate treatment based on gender. Indeed, our estimations show that an unfair gender gap is observed in loan size, and that this gap is almost exclusively attributable to the loan officers. We interpret this finding as evidence that, despite monitoring and wage incentivization, microcredit officers keep letting their subjective preferences interfere with loan granting. We conclude by suggesting alternative means to curb subjectivity in credit allocation to micro-entrepreneurs.

Keywords: Subjectivity Loan Size; Microcredit; Gender; Loan Officer; Entrepreneurs (search for similar items in EconPapers)
JEL-codes: D82 J33 L31 O16 (search for similar items in EconPapers)
Pages: 18 p.
Date: 2011-05
New Economics Papers: this item is included in nep-ban, nep-ent, nep-hme, nep-lam and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Subjectivity in credit allocation to micro-entrepreneurs: evidence from Brazil (2013)
Working Paper: Subjectivity in Credit Allocation to Micro-Entrepreneurs: Evidence from Brazil (2013)
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