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Development Finance

Paper Session

Sunday, Jan. 4, 2026 2:30 PM - 4:30 PM (EST)

Philadelphia Convention Center, 108-A
Hosted By: American Economic Association
  • Chair: Daniel Maggio, Rutgers University

Generous to Men or Harsh to Women? Experimentally Unpacking Gender Bias in Lending

Youngjoo Jung
,
University of Illinois-Urbana-Champaign

Abstract

In low-income economies with limited financing options, loan officers act as gatekeepers to capital, and their biases can distort capital allocation. I study gender bias in small business lending in Egypt by presenting 720 loan officers with past loan applications where I randomized applicant names. The same application is approved 6.2% more often if it has a male name, with the gap concentrated in low-quality loans that later defaulted, had late repayment history, or low credit scores. This shows that the bias manifests as generosity toward men rather than harshness toward women. Separating out bias in this way is critical to understanding its implications and how best to combat it. I test different strategies to decrease bias. Implicit Association Test feedback does not appear effective, while performance pay leads loan officers to increase screening effort and eliminates the bias. Combining both treatments also closes the gap without increasing screening effort. However, when officers receive AI assistance, they are more likely to follow approval suggestions for low-quality loans with male names. These results show that gender bias in small business lending manifests as generosity toward men, performance pay can mitigate it, and user bias must be considered in AI use.

Conditioning out the Poor? Consumption Inequality and the Design of Cash Transfer Programs

Santosh Anagol
,
University of Pennsylvania
Thomas Fujiwara
,
Princeton University
Martin Navarrete
,
University of Pennsylvania

Abstract

Conditionality can prevent poor households from receiving cash transfers. Re-analyzing five randomized evaluations of conditional cash transfers, we find: (1) non-compliers — households that do not meet education conditions — are common, representing 4.4% to 37% of eligible households; (2) non-compliers often have lower baseline consumption than compliers; (3) under standard social welfare function assumptions, a budget-neutral switch to unconditional cash transfers can raise the welfare gains from increased consumption by up to 46%, depending on the context. Our results suggest that conditionality exacerbating consumption inequality can be quantitatively important for the overall welfare impacts of cash transfer programs.

Posh Spice or Scary Spice? The Effects of Resource Booms on Wealth and Human Capital

Heidi Kaila
,
World Bank, Office of the Chief Economist of the Africa Region
Chris Boone
,
University of Massachusetts-Amherst - College of Social and Behavioral Sciences - Department of Economics
David E. Sahn
,
Cornell University

Abstract

We examine the impact of a six-fold increase in the global price of vanilla on smallholder vanilla-farming households in Madagascar. The sudden increase in price leads to sizable gains in household wealth for a broad proportion of the rural population in vanilla-growing areas. This wealth shock leads to improvements in adult psychological well-being, cognitive performance, and optimism about the economy. Existing research has found that improvements in local economic conditions can have negative effects on children's human capital if better earning opportunities reduce parental involvement with children. In our setting, we see no effects on child health or schooling, which is in line with our finding that adults do not increase their time spent working or reduce their investments in children. Our overall results are consistent with much of the existing evidence on the short-term effects of unconditional economic transfers, even though the magnitude of the wealth shock here is unusually large. These findings indicate that windfall gains from positive price shocks can have sizable welfare impacts, while benefits to children in the near term can be limited in an extremely poor setting. More research is needed to understand if children benefit in the longer term.

The Impact of Fast Payment Systems on Financial Inclusion in Emerging Markets: Evidence from India

Russell D. Toth
,
University of Sydney

Abstract

We evaluate whether emerging fast payment systems (FPSs) can accelerate uptake of formal financial services. We exploit variation in early exposure to India’s Unified Payments Interface (UPI) amongst already-banked individuals. We find that users of UPI nearly triple their likelihood of saving in formal accounts, while informal saving is unaffected. UPI users are also more likely to substitute cash for digital in receiving wages and paying bills, and to purchase insurance and make investments through digital channels. We provide new evidence that FPSs in emerging markets can deepen financial inclusion by encouraging the uptake of digital financial services.

Conditional Cash Transfers and Gender Norms: The Role of Policy Design

Ha Luong
,
Universidad Carlos III de Madrid and IEB

Abstract

This paper examines how policies affect gender norms by analyzing the impact of Peru’s conditional cash transfer program, Juntos, on children’s gender attitudes. Using the Young Lives Survey and a fuzzy regression discontinuity design, I find that Juntos reinforces traditional norms and generates gender-differentiated cognitive outcomes. Boys devote more time to studying, while girls spend more time on housework and are less likely to pursue higher education. Leveraging the program’s design that channels payments to mothers, I show that Juntos reduces maternal labor force participation and increases time devoted to childcare and program compliance, shaping children’s gendered behaviors and beliefs.
JEL Classifications
  • O1 - Economic Development