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Working Paper

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

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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.
Topics
Lending and access to credit
11.27.2013ISSN 2573-7953 WP 13-17DOI 10.26509/frbc-wp-201317
Keywords banking, economic development, financing, access to finance, national culture, social trust, gender development, gender discrimination
JEL Classification Codes G21, A14, J30, J16, O16

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Aggarwal, Raj, John W. Goodell, and Lauren Selleck. 2013. “Lending to Women in Microfinance: Influence of Social Trust and National Culture .” Federal Reserve Bank of Cleveland, Working Paper No. 13-17. https://doi.org/10.26509/frbc-wp-201317