Microfinance and Gender: Is there a Glass Ceiling in Loan Size?
This paper examines whether microfinance demonstrates discrimination against women.
Gender discrimination in microfinance may lead to three types of lender behavior depending on discrimination intensity. They are denial of all female applications, unfair downsizing of the highest female requested loans, and no impact. The study examines a database of 34,000 loan applications from a Brazilian MFI over an eleven-year period. It then applies partial-least-square estimation and quadratic gender-specific interaction terms in the model specification to the data. Study findings include:
- No discrimination is observed in the approval rate;
- Loan size offer demonstrates unfairness;
- Most ambitious women face the highest penalty;
- Female loan downsizing can be attributed to prejudiced credit officers as well as to the women borrowers who request for smaller loans than men.
Finally, although microfinance ensures a fair access to credit, the presence of a glass ceiling is faced by the most ambitious female entrepreneurs.