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

Isabelle Agier and Ariane Szafarz

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: This paper estimates the impact of loan officer subjectivity on microcredit granting by exploiting an exceptionally detailed database from a Brazilian microfinance institution. The loan officers collect field data, meet with applicants, and make recommendations to the credit committee, which has the final say on both loan approval and loan size (LS). The loan officer’s subjectivity is captured through gender bias. Our estimations indeed show subjective gender gap in LS. This gap is almost exclusively attributable to loan officers. We interpret this finding as evidence that, despite monitoring and wage incentivization, microcredit officers let their subjective preferences interfere with loan granting. We conclude by suggesting alternative means to curb subjectivity in credit allocation to micro-entrepreneurs.

Keywords: Subjectivity; Microcredit; Gender; Loan officer; Loan size; Entrepreneurs (search for similar items in EconPapers)
JEL-codes: D82 J33 L31 O16 (search for similar items in EconPapers)
Date: 2013
Note: SCOPUS: ar.j
References: Add references at CitEc
Citations: View citations in EconPapers (42)

Published in: Small business economics (2013) v.41 n° 1,p.263-275

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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 (2011)
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