Do Women Make Better Borrowers and Loan Officers? Evidence From Afghanistan

Gender bias in leadership and decision-making is a well-documented and pervasive topic that continues to garner significant attention in academic research and business literature. In this paper, by exploiting a unique proprietary dataset of 550 mid-corporate loan applications managed by a major European bank, we explore how the use of soft information influences lending decisions of female loan officers as compared to their male counterparts. We find that use of soft information reduces information asymmetry which helps female officers in making diligent lending decisions resulting in increased granted credit with a lower default probability. We also investigate gender affinity within the banking organisation and find that female loan approvers are more likely to be supportive of their subordinate female loan officers by approving more credit to the loan applications handled by female loan officers. Finally, we examine the possible mechanisms that can explain these results, and find that female loan officers are able to better collect and use soft information as they cultivate and maintain deeper firm-bank relationships with their clients due to higher threat of losing or being penalized in their jobs for any possible errors. We also rule out any other possible explanations such as differences in workload, work experience, loan officers’ optimism, managerial ability, and screening capabilities between female and male loan officers. Our findings carry important policy implications, reflected in the optimal allocation of capital in the economy and the reduction of gender-related exclusion, which is vital in creating an equitable society and fostering a more ethical and inclusive workplace.

Using a unique data set for a commercial bank in Albania, we analyze gender differences in loan officers’ performance. Loans screened and monitored by female loan officers have a lower likelihood to turn problematic than loans handled by male loan officers. This effect cannot be explained by borrower or loan officer selection or differences in screening, work load, and experience. However, while the performance gap always exists for female borrowers, female loan officers only gain a performance advantage with male borrowers with experience and do not have an advantage with borrowers that are legal entities. We therefore interpret this as suggestive evidence for female loan officers’ better capacity to build trust relationships with borrowers.

This paper examines the impact of the gender composition of client- loan officer pairs on loan repayment in an Ecuadorian microfinance institution. Using negative binomial regressions and random effects analyses, our results reveal that the most favourable client-loan officer pairs in terms of repayments are those with female loan officers whereas those with male loan officers are the least performing ones. We also show that a male client - female loan officer and female client-female loan officer pairs perform better when the previous loan officer the client was associated with was also a woman. Our findings have implications for theory and management. They point to relational differences between male and female loan officers when interacting with microfinance clients, these differences being confirmed through an additional qualitative research on the field.

This paper examines the effect of the gender combination of client-loan officer pairs on loan repayment in an Ecuadorian microfinance institution. We show that among the four possible client-loan officer gender pairs i.e. female client-female loan officer, female client-male loan officer, male client-male loan officer and male client-female loan officer, the most favourable pairs in terms of repayment are those with female loan officers whereas the least favourable are those with male loan officers. We also show that repayment is even further enhanced for all client-loan officer pairs when the client’s previous loan officer was a woman. Our findings point to relational differences between male and female loan officers when interacting with microfinance clients, which is also highlighted by our qualitative insights from the field.

Purpose The purpose of this study was to investigate whether the percentage of female borrowers moderate the effect of female leadership on financial sustainability of microfinance institutions (MFIs). Design/methodology/approach The study collected an unbalanced panel data of 821 MFIs between 2007 and 2018 from the Microfinance Information Exchange (MIX). MFIs’ financial sustainability was measured as operational self-sufficiency (OSS). The data were analyzed using the fixed effect regression model. Findings The study found that having women participation in managerial and board positions has a positive effect on OSS. The results further demonstrated that the proportion of female loan officers and female borrowers had a negative effect on OSS. In addition, the study’s findings revealed that the percentage of female borrowers moderated the relationship between female board members, female managers, female loan officers and OSS. Practical implications These findings may offer important insights to policymakers and practitioners in formulating strategies to improve financial inclusion for women by examining the inherent link between female borrowers and women’s participation in leadership roles within MFIs, which affects the financial sustainability of these entities. Originality/value This study is among the few that have examined the interaction between the proportion of female borrowers and other forms of female participation, including loan officers, managers and board members, and its effect on the financial sustainability of MFIs.

This paper analyses the impact of the gender of the loan officer-borrower pair on the loan-size, credit availability and time spent in managing the credit application. By using 3,020 lending transactions from Ecuador during 2016–2019, we document that the loan officer-borrower pair gender drives differences in the microcredit portfolio management. We find that female loan officers grant smaller microcredits to both male and female borrowers. However, the loan-size increases when matching the loan officer-borrower gender. We also demonstrate that female loan officers have greater loan approval rates, mainly in the segment of higher loan-sizes granted to male clients. Finally, our results show that the microcredits that have the fastest evaluation process are those that have a lower loan-size and are granted by female loan officers to female borrowers. Our findings have practical implications for the analysis of the credit availability for entrepreneurs as well as the loan portfolio management.

This study explores the role played by gender in lending transactions and specifically its effects on the loan portfolio credit risk of microfinance institutions (MFIs). Using a multicountry data set of developing countries, where MFIs mainly operate, the analysis shows that a higher proportion of female loan officers increases the loan portfolio at risk. Nonetheless, we also find that this positive relationship is negatively mediated by the gender affinity between female loan officers and female borrowers. Gender affinity suggests that female loan officers are more likely to lend to female borrowers, and this reduces the default rate of loans offered by MFIs.

This study examines the impact of loan officer characteristics on repayment rates of microfinance borrowers in Mexico applying multilevel analyses, with special attention to the impact of the gender of the loan officer on default rates. The results strongly suggest that loan officers play a crucial role in improving repayment rates in microfinance and that male loan officers are better able to induce borrowers to repay than female loan officers. This may be because men exert authority over women and face fewer problems working late, travelling through unsafe places, and combining a position as counsellor with enforcing repayment.

The purpose of the article is to investigate whether female presence in microfinance institutions’ management team, i.e. board members, managers and loan officers, will improve their financial performance. We combine financial data on MFIs that is available from the MIX Market database with original data on the gender composition of MFIs’ management team, who include board members, managers and loan officers. This original dataset of 223 MFIs is analyzed using Logit-Tobit regression models with return on assets (ROA) as the dependent variable and proportion of female board members, female loan officers and female managers as the main independent variables. We find that a higher proportion of female managers and female loan officers improve financial performance in microfinance, while a higher proportion of female board members does not. Our results indicate that a major contributor to the financial sustainability of microfinance institutions is having a higher rate of women in vital decision-making roles, especially lower level management positions.

We explore whether loan officer gender affects loan repayment performance in Cameroonian microfinance institutions (MFIs). After controlling for demand‐side factors (borrower characteristics), lending methodology, loan contract terms, year, and industry fixed effects, we apply a pooled probit model to a unique loan‐level dataset including more than 7000 loans approved between 2007 and 2012 by two Cameroonian commercial MFIs. We find that loans granted and monitored by male loan officers perform better than those granted by female officers and that loans approved under joint liability contracts and monitored by male loan officers are less likely to fall into arrears. Our findings also show that the performance advantage of male loan officers over female officers is confirmed only during bad times. Compared to female loan officers, male loan officers seem to intensify their monitoring efforts during a crisis period. The results are robust after controlling for selection bias and are less sensitive to a change in the loan repayment performance measurement.

Previous research provides unequivocal evidence that women–owned businesses start with both lower levels of overall capitalization and lower ratios of debt finance. Structural dissimilarities between male–owned and female–owned businesses explain most, but by no means all, of these contrasting funding profiles. Explanations of residual differences, viewed in terms of supply–side discrimination or demand–side debt and risk aversion, remain controversial. Using experimental and qualitative methodologies, this study explores the role of gender in bank lending decisions, focusing on the criteria and processes used by male and female loan officers. Results reveal similarities in the criteria used to assess male and female applicants but show modest differences in the emphasis given to certain criteria by male and female lending officers. The processes used by male and female lending officers to negotiate loan applications revealed the greatest differences.

1.Microfinance Industry – Context of Analysis. This paper is an introduction to the microfinance industry. It serves as a context of analysis, for the empirical settings and basis for building the theoretical argument for the thesis. 2.Women in Microfinance Institutions: The Road to Poverty Reduction and Gender Equality? One of the unique aspects of microfinance institutions is their focus on outreach, i.e. their ability to reach the poor. This paper explores whether the presence of women in microfinance institutions is associated with improved outreach. Building on prior research that shows that women tend to improve financial performance and social responsibility, we examine an original dataset of 226 microfinance institutions. The empirical results suggest that the presence of a female CEO, female managers and female loan officers is directly related to improved outreach, while the presence of women board members is not. 3. Women in Microfinance Institutions: Is There a Trade-Off Between Outreach and Sustainability? Abstract This paper’s contribution to the understanding of microfinance is two-fold. First, while it has been shown that female CEOs in MFIs increase financial performance, it will be argued that female managers, female loan officers and female board members will do the same. Secondly, having previously shown that having a female presence in management in MFIs improves social performance the outreach, it will be argued that having females in the MFIs’ management will not lead to a trade-off between outreach and sustainability. These findings are based on an original data set of 226 MFIs. Statistical analysis demonstrates that a weak relationship between female managers and female loan officers vis-a-vis financial performance, but female board members do not. The trade-off between outreach and sustainability can be avoided with the appointment of females to the MFIs’ management positions, but the same cannot be concluded for female board members.

What Begets Loan Performance? The Human Factor in the Corporate Lending Market

The Influence of Loan Officers on Loan Contract Design and Performance

The influence of loan officers on loan contract design and performance