Discriminatory Lending : Evidence from Bankers in the Lab

We implement a lab-in-the-field experiment with 334 Turkish loan officers to test for the presence, and learn about the mechanisms, of gender discrimination in small business lending. Each officer reviews multiple real-life loan applications in which we randomize the applicant's gender. While provisional approval rates are the same for male and female applicants, we detect a more subtle form of discrimination. 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