Discriminatory Lending: Evidence from Bankers in the Lab
- (pp. 31-68)
Abstract
We implement a lab-in-the-field experiment with 334 Turkish loan officers to document gender discrimination in small business lending and unpack mechanisms. Officers review multiple real-life loan applications in which we randomize applicant gender. While unconditional approval rates are the same, officers are 26 percent more likely to require a guarantor when we present the same application as coming from a female instead of a male entrepreneur. A causal forest algorithm to estimate heterogeneous treatment effects reveals that discrimination is concentrated among young, inexperienced, and gender-biased officers. Discrimination mainly affects female loan applicants in male-dominated industries, indicating how financial frictions can perpetuate entrepreneurial gender segregation across sectors.Citation
Brock, J. Michelle, and Ralph De Haas. 2023. "Discriminatory Lending: Evidence from Bankers in the Lab." American Economic Journal: Applied Economics, 15 (2): 31-68. DOI: 10.1257/app.20210180Additional Materials
JEL Classification
- C93 Field Experiments
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- J16 Economics of Gender; Non-labor Discrimination
- L25 Firm Performance: Size, Diversification, and Scope
- L26 Entrepreneurship
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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