The Effect of Gender Disparities and COVID-19 on the Time to Repay of Microfinance Loans : Evidence from Mexico

This paper investigates how gender disparities affect the time to default of both group and individual micro-finance loans. We also document and control for the effect of the Covid-19 pandemic on micro-finance loan borrower’s time to repay capacity. We use two large proprietary samples of bank micro-loan-level data granted to group and individual borrowers from August 2017 to August 2021. Our unconditional estimates show that gender disparities matter economically only for group loans as the median of the female borrower’s time to default can occur almost the equivalent of three consecutive past due payments earlier. We show that this result persists when we control for micro, industry and macroeconomic factors. We report that the Covid-19 materialized as a spike effect that evolved afterward to a reduction in aggregate default rates. Our results have important policy implications for financial authorities