How gender and emotions bias the credit decision-making in banking firms

Abstract

This study sheds the light on the effect of the emotional bias and the gender on the credit risk management of Tunisian banks. We may expect that male and female CEO react differently to emotions and that gender-based behavior differences will affect the organizational design of the credit decision making. We opt for a Bayesian Net Work method which uses the variables to express the events or objects and analyze their behaviors to model such causal relationships. Results show that emotional bias can explain the cross-sectional heterogeneity in risk-taking behavior among banks and that managers’ gender types influences the propensity to delegate the credit decision making. Overconfident and optimist female banks’ manager are more conservative than males and they tend to centralize the credit decision-making process. Findings show also that financial literacy significatively affect the credit decision making, whereas bank size have no effect.