Female Leaders and Financial Inclusion. Evidence from Microfinance Institutions

This research advances the hypothesis that female leaders (CEO, chair, and director) of a microfinance institution (MFI) give more priority to the poorest families in loan provision than male leaders. We differentiate between a depth and a width dimension of financial inclusion. The data set is a unique global panel of MFIs collected from MFI raters' reports. Our sample is also unique in the sense that about one third of all MFIs have a female CEO. The problem of endogeneity for the female leader is resolved by running Heckman's two-step endogenous dummy variable estimation with instrument for the female leader. We find evidence for greater depth financial inclusion (smaller average loan, more gender biased) with a female leader, but not for width financial inclusion (credit client growth). The female leaders exhibit greater altruism, greater competition avoidance, but not greater risk aversion than male peers