Lending to Women in Microfinance: Influence of Social Trust and National Culture

32 Pages Posted: 11 Jan 2014

See all articles by Raj Aggarwal

Raj Aggarwal

University of Akron; Federal Reserve Banks - Federal Reserve Bank of Cleveland; Kent State University; Kent State University Foundation

John W. Goodell

University of Akron - Department of Finance, College of Business Administration

Lauren Selleck

University of Akron

Date Written: November 10, 2013

Abstract

The preference of microfinance institutions for women borrowers is generally attributed to two reasons: women borrowers are more trustworthy and have greater social impact. However, the role of social trust with regard to this gender preference has not been adequately investigated. Controlling for the social outreach goals of MFIs, we document that MFIs favor women more in low trust countries, suggesting that women are targeted to offset low social trust. We also examine how the nature of trust formation affects this relationship between gender targeting and trust. Our results should be of considerable interest to policymakers and scholars.

Keywords: Banking; Economic development; Financing; Access to finance; National culture; Social trust; Gender development; Gender discrimination

JEL Classification: G21; A14; J30; J16; O16

Suggested Citation

Aggarwal, Raj and Goodell, John W. and Selleck, Lauren, Lending to Women in Microfinance: Influence of Social Trust and National Culture (November 10, 2013). FRB of Cleveland Working Paper No. 13-17, Available at SSRN: https://ssrn.com/abstract=2377370 or http://dx.doi.org/10.2139/ssrn.2377370

Raj Aggarwal (Contact Author)

University of Akron ( email )

Akron, OH 44325-4803
United States

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Kent State University ( email )

College of Business Administration
Kent, OH 44242-0001
United States

Kent State University Foundation ( email )

Akron, OH 44325-4803
United States

John W. Goodell

University of Akron - Department of Finance, College of Business Administration ( email )

259 S. Broadway
Akron, OH 44325
United States

Lauren Selleck

University of Akron ( email )

259 S. Broadway
Akron, OH 44325
United States

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