Are Women Better Loan Offcers? Thorsten Beck Patrck Behr André Güttler
Motvaton Women often seen as better mcrocredt borrowers, but what about gender dfferences n loan offcers? Incentve structure for loan offcers does gender matter? Whle studes on gender dfferences n nvestment behavor, fnancal lteracy etc., no study yet on gender dfferences n loan offcer performance
Hypotheses Women are better loan offcers Hgher opportunty costs, thus hgher effort More conservatve, more afrad of sanctons Skeptcs Male loan offcers mght have easer task n tradtonal, patrarchc, herarchcal socetes Gender match mght be mportant Female loan offcers mght be better snce t s harder for them to get a ob,.e. more qualfed to start wth The role of experence More experence, lower default Younger loan offcers have hgher opportunty costs, exert more effor
Our contrbuton Unque dataset for an Albanan mcrobank for the perod 1996 to 2006 Borrowers characterstcs Loan characterstcs Loan offcers gender, age, and experence Includes reected loan applcant 43,000 loan applcatons and 31,000 loans 5 branches n Trana Indvdual loans
Some nformaton about the mcrobank (1) 0.085 4,372 Average 179,307 31,614 43,126 Sum 0.013 6,152 31,600 3,176 7,024 9,944 2006 0.098 6,582 37,700 3,996 7,339 9,437 2005 0.108 7,010 39,300 4,068 7,836 9,656 2004 0.049 2,697 24,100 6,455 2,941 3,737 2003 0.059 1,746 14,400 5,762 1,907 2,495 2002 0.063 1,308 8,193 3,674 1,456 2,230 2001 0.102 1,277 9,709 4,062 1,438 2,390 2000 0.034 545 5,588 5,287 590 1,057 1999 0.085 413 4,302 4,616 481 932 1998 0.080 227 1,520 3,348 251 454 1997 0.245 297 2,895 3,646 351 794 1996 Applcatons Default frequency Borrowers New loan volume (1,000) Loan sze Approved loans Year of applcaton
Some nformaton about the mcrobank (2) Year of applcaton Loan usage Busness Loans Real estate Consumpton Share of female borrowers Share of female loan offcers 1996 1.000 0.195 0.644 1997 1.000 0.183 0.709 1998 1.000 0.172 0.885 1999 0.863 0.137 0.213 0.848 2000 0.695 0.305 0.193 0.616 2001 0.656 0.342 0.002 0.198 0.651 2002 0.543 0.385 0.072 0.185 0.757 2003 0.426 0.328 0.246 0.226 0.656 2004 0.398 0.303 0.299 0.242 0.522 2005 0.619 0.167 0.214 0.212 0.463 2006 0.625 0.076 0.283 0.250 0.499 Sum Average 0.711 0.186 0.101 0.206 0.659
The model Default = α + β * Female loan offcer + γ * D + δ * X + ε 1 * Female + β 2 Default = α + β * Female 1 * Female loan offcer + β Male 2 * Female loan offcer + β Male 3 * Male loan offcer + γ * D + δ * X + ε Default β 2, k Male loan Male = α + β offcer 1, k * Female loan * Female offcer * Female loan * Experence quartle * Experence quartle offcer + γ * D * Experence quartle k, + δ * X + β 3, k + ε Male * k, + Default: at least one payment more than 30 days n arrears Probt model Clustered by loan offcers
Control varables Borrowers characterstcs Age Cvl status Employment status Phone avalable Household sze Loan characterstcs Interest rate Approved amount Approved maturty Approved share (relatve to appled share) Guarantee (personal, mortgage, chattel, other) Loan use (consumpton, producton, real estate) Loan offcer characterstcs Age Experence (Applcatons processed, tme wth bank) Branch and year dummes
Splttng the sample Man analyss: actual loans Restrct to frst loans: gender dfference should be stronger Restrct to frst and last loan (so only one loan): soco-demographc borrower data overwrtten Drop outlers (loan sze, borrower age) Baselne analyss: 6,775 loans granted by 141 loan offcers Robustness tests: Relax last loan restrcton Look at subsequent loans
Female Female loan offcer Female & Female loan offcer Male & Female loan offcer Male & Male loan offcer Loan applcatons per loan offcer Age of loan offcer Interest rate Age of borrower Cvl status Self employed Number persons household Phone avalablty ln(approved amount) ln(adusted maturty) Approved share Personal guarantee Mortgage guarantee Chattel guarantee Observatons Share of default correctly predcted Share of non-default correctly predcted Baselne Results -0.042*** -0.047*** 0.018-0.009*** 0.882*** -0.002*** -0.031*** 0.014-0.001-0.092*** 0.015* 0.029** -0.107*** 0.026** -0.028** 0.017 6,775 75.4 61.4-0.043*** -0.005 0.044*** 0.018-0.009*** 0.883*** -0.002*** -0.031*** 0.014-0.001-0.093*** 0.015* 0.029** -0.106*** 0.026** -0.028** 0.016 6,775 75.8 61.1
Alternatve default defntons and samples 15 days 30 days 60 days All frst loans, 30 days Female & Female loan offcer -0.058*** -0.033*** -0.035*** -0.023*** Male & Female loan offcer -0.009-0.005-0.012-0.004 Male & Male loan offcer 0.042** 0.013-0.002 0.027*** Observatons 7,107 6,770 6,571 14,020 Pseudo R square 0.142 0.139 0.148 0.090 Share of default correctly predcted 75.2 79.9 78,2 71.3 Share of non-default correctly predcted 62.2 60.7 65.6 62.0
Controllng and nteractng wth experence Panel A: Performance dfferences for female borrowers Female & Female loan offcer & 0-25% Experence -0.033-0.050* -0.026 Female & Female loan offcer & 25-50% Experence -0.042* -0.044** -0.063*** Female & Female loan offcer & 50-75% Experence -0.056*** -0.057*** -0.041* Female & Female loan offcer & 75-100% Experence -0.052*** -0.014-0.056*** Male & Female loan offcer & 0-25% Experence 0.010-0.020 0.022 Male & Female loan offcer & 25-50% Experence 0.003-0.007-0.023 Male & Female loan offcer & 50-75% Experence -0.008 0.006-0.014 Male & Female loan offcer & 75-100% Experence -0.037** 0.018-0.012 Male & Male loan offcer & 0-25% Experence 0.036* 0.012 0.042* Male & Male loan offcer & 25-50% Experence 0.022 0.053** 0.015 Male & Male loan offcer & 50-75% Experence 0.061*** 0.035* 0.045** Male & Male loan offcer & 75-100% Experence 0.063** 0.098*** 0.063*** Loan applcatons per loan offcer 0.027 0.027 Age of loan offcer -0.008*** -0.007*** -0.008** Tme snce frst loan applcaton -0.019* Panel B: Performance dfferences for male borrowers Male & Male loan offcer & 0-25% Experence 0.030 0.033 0.036 Male & Male loan offcer & 25-50% Experence 0.022 0.062** 0.016 Male & Male loan offcer & 50-75% Experence 0.073*** 0.032* 0.057** Male & Male loan offcer & 75-100% Experence 0.111*** 0.083*** 0.093***
Robustness test: subsequent loans Female & Female loan offcer -0.018*** -0.021** -0.015** -0.015 Male & Female loan offcer -0.004-0.007-0.007 Male & Male loan offcer 0.003-0.006 0.003 0.007 Female & Female loan offcer & Duraton relatonshp 0.002 Male & Female loan offcer & Duraton relatonshp 0.001-0.004 Male & Male loan offcer & Duraton relatonshp 0.005-0.002 Duraton relatonshp -0.008*** -0.011*** -0.007*** -0.005* Any prevous applcaton reected 0.037*** 0.036*** 0.027*** 0.027*** Any prevous loan defaulted 0.371*** 0.374*** 0.298*** 0.297*** Observatons 6,448 6,448 12,940 12,940 Pseudo R square 0.270 0.270 0.171 0.171 Share of default correctly predcted 84.9 84.9 75.2 75.1 Share of non-default correctly predcted 70.4 70.6 67.2 67.2
Loan approval decsons Female & Female loan offcer 0.009-0.003-0.014-0.014 Male & Female loan offcer 0.017 0.004-0.011-0.015 Male & Male loan offcer 0.012 0.006 0.009 0.009 Duraton relatonshp 0.001-0.001 Any prevous applcaton reected -0.065*** -0.053*** Any prevous loan defaulted -0.106*** -0.090*** Loan applcatons per loan offcer 0.027 0.024 0.004-0.013 Age of loan offcer -0.006*** -0.005*** -0.004** -0.006*** Age of borrower 0.001*** 0.001*** Cvl status -0.006 0.008 Self employed 0.022** 0.003 Number persons household 0.009*** 0.003* Phone avalablty 0.033** 0.037*** ln(appled amount) -0.009* -0.007** -0.008** -0.009*** ln(appled maturty) 0.034*** 0.022*** 0.030*** 0.040*** Personal guarantee 0.025*** 0.018*** 0.015 0.008 Mortgage guarantee 0.018 0.007-0.014-0.010 Chattel guarantee 0.151*** 0.096*** 0.074*** 0.036** Observatons 8,297 15,986 7,240 14,502 Pseudo R square 0.094 0.095 0.130 0.171 Share of approvals correctly predcted 66.8 65.1 72.3 72.0 Share of non-approvals correctly predcted 62.5 63.4 67.9 69.5
Conclusons Women are better loan offcers, experence lower default on ther borrowers Not drven by hgher experence Montorng not screenng!