Do lenders discriminate against minority and woman entrepreneurs?

Blanchard, Lloyd A.; Zhao, Bo; Yinger, John

doi:10.1016/j.jue.2007.03.001

Cited by 192 publications

(155 citation statements)

References 29 publications

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“…Gender does not appear to have had an effect on lending outcomes under more typical macroeconomic conditions, consistent with some prior work in this area (Aseidu et al 2012, Blanchard et al 2008, Blanchflower et al 2003. However, when economic conditions worsened, women entrepreneurs faced greater difficulties obtaining funding than did men entrepreneurs with similar observable characteristics.…”

Section: The Changing Effect Of Gender On Loan Denial Ratessupporting

confidence: 83%

“…Moreover, recent studies that use the strongest research design for ruling out unmeasured differences between men and women entrepreneurs (i.e., experimentally manipulating information about the gender of an entrepreneur) document that potential investors, lenders and technology licensing officers favor men-owned start-ups despite the lack of any underlying differences in the quality of the venture or the qualifications of the founder (Bigelow et al 2014;Brooks et al 2014;Shane et al 2012;Thébaud 2015). However, a number of other studies have concluded that women-led firms are not disadvantaged once the background characteristics of firms and entrepreneurs are taken into account (Asiedu et al 2012;Blanchard et al 2008;Blanchflower et al 2003;Haines, Orser, and Riding 1999;Orser et al 2006). Furthermore, when gender bias is detected, the size of the penalty also tends to vary.…”

Section: Gendered Disadvantage In Entrepreneurial Investmentmentioning

confidence: 99%

“…Recent experimental studies have also found that potential investors are systematically likely to view women entrepreneurs as less competent, credible and investment-worthy than equivalently qualified men counterparts (Bigelow et al 2014;Brooks et al 2014;Thébaud 2015). Yet, in contrast, a sizable number of studies have found no evidence of a net funding disadvantage for women-led firms (see, e.g., Asiedu, Freeman and Nti-Addae 2012;Blanchard, Zhao and Yinger 2008;Blanchflower, Levine and Zimmerman 2003;Carter et al 2007;Cavalluzo and Wolken 2005;Orser, Riding, and Manley 2006). One interpretation of these mixed results is that gender-based disadvantage in entrepreneurial investment is not a constant; rather, it may vary depending upon the conditions under which lenders and investors make decisions.…”

mentioning

confidence: 98%

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Unequal Hard Times: The Influence of the Great Recession on Gender Bias in Entrepreneurial Financing

Thébaud¹,

Sharkey²

2016

SocScience

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Prior work finds mixed evidence of gender bias in lenders' willingness to approve loans to entrepreneurs during normal macroeconomic conditions. However, various theories predict that gender bias is more likely to manifest when there is greater uncertainty or when decision-makers' choices are under greater scrutiny from others. Such conditions characterized the lending market in the recent economic downturn. This article draws on an analysis of panel data from the Kauffman Firm Survey to investigate how the Great Recession affected the gender gap in entrepreneurial access to financing, net of individual and firm-level characteristics. Consistent with predictions, we find that women-led firms were significantly more likely than men-led firms to encounter difficulty in acquiring funding when small-business lending contracted in 2009 and 2010. We assess the consistency of our results with two different theories of bias or discrimination. Our findings shed light on mechanisms that may contribute to disadvantages for women entrepreneurs and, more broadly, highlight how the effects of ascribed status characteristics (e.g., gender) on economic decision-making may vary systematically with macroeconomic conditions.

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Section: The Changing Effect Of Gender On Loan Denial Ratessupporting

confidence: 83%

Section: Gendered Disadvantage In Entrepreneurial Investmentmentioning

confidence: 99%

mentioning

confidence: 98%

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Unequal Hard Times: The Influence of the Great Recession on Gender Bias in Entrepreneurial Financing

Thébaud¹,

Sharkey²

2016

SocScience

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“…Access to MFIs' databases could make it easier to check whether banks exert disparate treatment based on race and ethnicity. The literature finds that non-white loan applicants can indeed be discriminated against (Storey, 2004;Blanchard et al, 2008;Blanchflower et al, 2003). Since a large proportion of loan applicants in our database are immigrants, we could use their names to detect discrimination based on race and/or ethnicity.…”

Section: Resultsmentioning

confidence: 99%

Gender Biases in Bank Lending: Lessons from Microcredit in France

Cozarenco

Szafarz

2015

J Bus Ethics

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The evidence on gender discrimination in lending remains controversial. To capture gender biases in banks' loan allocations, we observe the impact on the applicants of a microfinance institution (MFI) and exploit the natural experiment of a regulatory change imposing a strict EUR 10,000 loan ceiling on microcredit. Descriptive statistics indicate that the presence of the ceiling is associated both with bank-MFI co-financing and with harsher treatment of female borrowers. To investigate causal links, we develop an econometric approach that addresses the concerns of selection biases, multicollinearity, and endogeneity. Our empirical findings suggest that the change in the MFI's gender-related attitude was triggered by banks through co-financing. Hence, we speculate that co-financing pushes ceiling-constrained MFIs to import whatever biases in loan granting that the banks are prone to. Overall, this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women's empowerment efforts made by MFIs.

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“…To make sense of potential caste-based discrimination in accessing credit, it is useful to note the parallels with discrimination in labor markets (Thorat and Attewell, 2007;Altonji and Blank, 1999) and the role of racial and gender-based discrimination in accessing bank credit in the USA (e.g. Blanchflower et al, 2003;Blanchard et al, 2008;Asiedu et al, 2010). Castes in India can be categorised into four major groups, viz.…”

Section: Introductionmentioning

confidence: 99%

Caste and Credit: A Woeful Tale?

Kumar

Venkatachalam

2018

The Journal of Development Studies

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This paper examines caste-based differences in farmers' access to bank loans in rural India. We investigate whether banks practice taste-based discrimination on the basis of caste. In order to identify potential discrimination, we consider loan applications and approval decisions separately. We find significant inter-caste differences in application rates, and evidence of discrimination against Scheduled Tribe borrowers at the approval stage. To rule out the role of statistical discrimination, we simulate unobserved credit histories with various distributions. Evidence for taste-based discrimination persists despite accounting for unobservables. However, we find that this discrimination does not affect small farmers.

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Do lenders discriminate against minority and woman entrepreneurs?

Cited by 192 publications

References 29 publications

Unequal Hard Times: The Influence of the Great Recession on Gender Bias in Entrepreneurial Financing

Unequal Hard Times: The Influence of the Great Recession on Gender Bias in Entrepreneurial Financing

Gender Biases in Bank Lending: Lessons from Microcredit in France

Caste and Credit: A Woeful Tale?

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