Evening the Credit Score ? Impact of Psychometric Loan Appraisal for Women Entrepreneurs

Aly Salman Alibhai, Rachel Margaret Cassidy, Markus P. Goldstein and Sreelakshmi Papineni

No 10230, Policy Research Working Paper Series from The World Bank

Abstract: Women’s lower rates of ownership of collateralizable assets are a constraint to accessing larger business loans. This paper tests the impact of using psychometric credit scoring as a substitute for collateral for loans up to US$7,500, via a randomized controlled trial with a microfinance institution in Ethiopia. The paper finds positive impacts on women’s access to credit, and survival of their firms during the COVID-19 pandemic and conflict. Firms that remained operational were profitable; but there is limited evidence of impact on firm growth under these circumstances. The study showcases the potential for using innovative technologies to extend entrepreneurial finance to underserved markets.

Date: 2022-11-14
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:10230

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