Microfinance and Gender Is there a Glass Ceiling on Loan Size

Microfinance and Gender Is there a Glass Ceiling on Loan Size

World Development Vol. xx, No. x, pp. xxx–xxx, 2012
Ó 2012 Elsevier Ltd. All rights reserved.
0305-750X/$ - see front matter
www.elsevier.com/locate/worlddev

http://dx.doi.org/10.1016/j.worlddev.2012.06.016

Microfinance and Gender: Is there a Glass Ceiling on Loan Size?
ISABELLE AGIER
Universite´ Paris I Panthe´on Sorbonne, France
Centre for European Research in Microfinance (CERMi), Belgium

and
ARIANE SZAFARZ *
Universite´ Libre de Bruxelles (ULB),
Belgium
Centre for European Research in Microfinance (CERMi), Belgium
Summary. — Most of the customers of microfinance institutions are female. But do men and women benefit from the same credit conditions? We investigate this issue by presenting an original model and testing its predictions on an exceptional database comprising 34,000
loan applications from a Brazilian microfinance institution. The model determines the optimal loan size fixed by a gender-biased lender,
depending on the borrower’s creditworthiness and the intensity of the lender’s bias. The empirical analysis detects no gender bias in loan denial,
but uncovers disparate treatment with regard to credit conditions. In particular, we find a “glass ceiling” effect. The gender gap in loan size
increases disproportionately with respect to the scale of the borrower’s project. The results are insensitive to the loan officer’s gender.
Ó 2012 Elsevier Ltd. All rights reserved.
Key words — microcredit, microfinance, gender discrimination, women entrepreneurs, Latin America, Brazil

1. INTRODUCTION

Considering men and women with similar expected creditworthiness is essential. Previous studies on gender differences
in small-business lending (Coleman, 2000; Fay & Williams,
1993; Haynes, 1999; Wilson, Carter, Tagg, Shaw, & Lam,
2007) conclude that structural dissimilarities in business characteristics partially explain differences in loan conditions
(Fabowale, Orser, & Riding, 1995; Read, 1998). However,
such characteristics do not fully account...

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