My paper with J. Michelle Brock on gender discrimination in small business lending is now available as a CEPR Discussion Paper. The following VoxEU column gives a brief summary. In a nutshell, the paper reports on a lab-in the-field experiment that Michelle and I implemented with 334 Turkish loan officers to test for the presence, and learn about the mechanisms, of gender discrimination in small business lending. During the experiment, each officer reviewed multiple real-life loan applications in which we randomized the applicant’s gender. We find that while provisional approval rates are the same for male and female applicants, there is a more subtle form of discrimination going on. Loan officers are 30 percent more likely to make approval conditional on the presence of a guarantor when we present an application as coming from a female instead of a male entrepreneur. This discrimination is concentrated among young, inexperienced, and gender biased loan officers. Discrimination is also most pronounced for loans that performed well in real life, making it costly to the bank.
