Reducing gender discrimination in MSME lending by informing loan officers of their own implicit bias

Last registered on October 07, 2024

Pre-Trial

Trial Information

General Information

Title
Reducing gender discrimination in MSME lending by informing loan officers of their own implicit bias
RCT ID
AEARCTR-0014499
Initial registration date
October 01, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
October 07, 2024, 7:10 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Affiliation
IDB Invest

Other Primary Investigator(s)

PI Affiliation
EBRD
PI Affiliation
IDB Invest
PI Affiliation
Stockholm University

Additional Trial Information

Status
In development
Start date
2024-10-02
End date
2025-10-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Globally, women entrepreneurs are more likely to report access to finance as a constraint to doing business. Previous research shows that women entrepreneurs often face higher rejection rates, smaller loan amounts, higher interest rates, or more stringent guarantor requirements compared to men. These patterns are present in both high- and low-income countries, partly driven by traditional gender norms and the implicit biases these norms foster. Often referred to as unconscious bias, implicit bias can influence behavior without the decision-maker's conscious awareness, making it a persistent barrier for banks aiming to reduce gender-based discrimination in lending.

This project will examine the causal impact of informing loan officers about their potential biases on their lending behavior and loan portfolio performance. We will assess this by first administering an Implicit Association Test (IAT) to loan officers, and then randomly varying the timing of score disclosure. Some officers will receive immediate feedback on their IAT score, while others will receive the feedback later. This will allow us to evaluate whether loan officers alter their behavior after becoming aware of their potential biases.

External Link(s)

Registration Citation

Citation
Arraiz, Irani et al. 2024. "Reducing gender discrimination in MSME lending by informing loan officers of their own implicit bias." AEA RCT Registry. October 07. https://doi.org/10.1257/rct.14499-1.0
Experimental Details

Interventions

Intervention(s)

This project will examine the causal impact of informing loan officers about their potential gender biases on their lending behavior and loan portfolio performance. We will assess this by first administering an Implicit Association Test (IAT) to loan officers, and then randomly varying the timing of score disclosure. Some officers will receive immediate feedback on their IAT score, while others will receive the feedback later. This will allow us to evaluate whether loan officers alter their behavior after becoming aware of their potential biases.

Intervention Start Date
2024-10-02
Intervention End Date
2024-12-20

Primary Outcomes

Primary Outcomes (end points)
Loan rejection rates, loan size, interest rates, guarantor requirements, borrower repayment behavior
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The impact will be assessed by randomly varying the timing of disclosure of loan officers' potential gender stereotypes. To begin, loan officers' gender biases will be measured using an Implicit Association Test (IAT). After the test, half of the loan officers will receive immediate feedback on their IAT score (the treatment group), while the other half will receive their feedback six months later (the control group).

Loan officer behavior and portfolio performance will be tracked and evaluated over the six-month period following the test.
Experimental Design Details
Not available
Randomization Method
Randomization done in office by a computer.
Randomization Unit
Individual level randomization
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
Not a clustered design
Sample size: planned number of observations
160 individuals
Sample size (or number of clusters) by treatment arms
80 treated and 80 control
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Heartland IRB
IRB Approval Date
2024-09-25
IRB Approval Number
092524-609