Male Borrowers Research Articles

Countersignaling, the Impact of Gender and Social Preferences in P2P Lending

I examine whether Peer-to-Peer (P2P) lending conforms to countersignaling theory. There is a need for a signaling framework, because lenders do not know the exact inherent quality of borrowers, and I assume the length and existence of loan descriptions to function as a signal. In line with countersignaling theory, not providing a loan description and description length are positively related to funding success. Signaling power does not differ between female and male borrowers. Nevertheless, loan descriptions have no influence on a resulting default. Thus, the mechanism through which loan descriptions affect funding success is based on lender (social) preferences and perceptions and not on inferences from previous experience, which is also indicated in the influence of the wording.

Do women borrowers augment financial performance of MFIs?

ABSTRACTThere is some consensus that depth of outreach and financial performance of Microfinance Institutions (MFI) are positively correlated. A majority of microcredit borrowers are women and since the prevalence of female borrowers is even greater among the very poor, there should be a positive correlation between female borrowers and financial performance. Most of the MFIs target women as preferred borrowers. However, no study to date has investigated the relationship between targeting women and MFI’s sustainability with respect to profitability and yield. Utilizing a panel of 892 MFIs over a period of 10 years, this study shows that increased proportion of women borrowers has a statistically significant positive impact on yield and financial performance of MFIs. Consequently, this article also analyses the implication as to whether female borrowers have better repayment rate than male borrowers.

Heterogeneous effects of microcredit: Evidence from large-scale programs in Bangladesh

This paper evaluates the effects of microcredit on household consumption using a large dataset from Bangladesh. Village fixed effects and instrumental variable strategies are used to estimate the causal effects of microcredit program participation. Overall, the results indicate that the effects of microcredit on consumption vary across different groups of poor household borrowers. The groups that benefit the most include the poorest of the poor participants. The benefits are low for households that are marginal to the participation decision. The effects of participation are generally stronger for female borrowers than for male borrowers.

Predicting loan repayment default among second tier borrowers in Ghana

This paper evaluates factors that affect the probability of loan repayment defaults using repayment data on loans granted by Snapi Aba Savings and Loans Ltd, Ghana. Results from logistic regression analysis of the data indicate that, contrary to findings elsewhere, age of borrowers is irrelevant in predicting probability of defaults in this study. Rather, credit screenings should focus on the gender of borrowers, payment frequency, loan cycle, and loan size. The probability of repayment defaults increases by about 1.3% for male borrowers as compared to female borrowers. Further, clients with longer credit history with the lending agency are more likely to default, and default probability is declining in loan size. Also, one–time lump–sum loan repayments reduce repayment defaults by about 2.2% as compared to regular monthly repayment options. Finally, educational level of borrowers and interest rates are irrelevant in predicting defaults.

Gender and Banking: Are Women Better Loan Officers?*

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.

Reversing the Trend: The Recent Expansion of the Reverse Mortgage Market

Reverse mortgages allow elderly homeowners to tap into their housing wealth without having to sell or move out of their homes. However, very few eligible homeowners have used reverse mortgages to achieve consumption smoothing until recently when the reverse mortgage market in the United States witnessed substantial growth. This paper examines 1989-2007 loan-level reverse mortgage data and presents a number of findings. First, I show that recent reverse mortgage borrowers are significantly different from earlier borrowers in many respects. Second, I find that borrowers who take the line-of-credit payment plan, single male borrowers, and borrowers with higher house values exit their homes sooner than other reverse mortgage borrowers. Third, I combine the reverse mortgage data with county-level house price data to show that elderly homeowners are more likely to purchase reverse mortgages when the local housing market is at its peak. This finding suggests that the 2000-05 housing market boom may be partially responsible for the rapid growth of reverse mortgage markets. Lastly, I show that the Federal Housing Administration (FHA) mortgage limits, which cap the amount of housing wealth that an eligible homeowner can borrow against, have no effect on the demand for reverse mortgages. The findings have important implications to both policy-making and the economics of housing and aging.