Credit Officers and Loan Granting in Microfinance: Brazilian Evidence

Assessing role of credit officers in microloan granting decisions
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This paper quantifies the degree of influence of credit officers on microloan granting decisions. The study is based on information from Vivacred, a Brazilian MFI.

The study analyzes data concerning 34,000 applications and 32,000 actual loans. It examines the extent to which credit officers are responsible for gender disparities in loan size and allocation. The study reveals that:

  • Women entrepreneurs receive smaller loans from Vivacred than their male counterparts;
  • Gender bias is almost exclusively attributable to credit officers;
  • Monitoring does not prevent gender bias of credit officers;
  • Regulations, codes of conduct, well-designed hiring policy and pressure from donors could help in controlling credit officers’ influence.

Most MFIs try to align credit officers’ objectives to their mission through wage incentives and monitoring. These have not been very effective. The paper emphasizes the need for innovative disciplining devices that are designed to combat detrimental mission drift.

About this Publication

By Agier, I. & Szafarz, A.