nep-mfd New Economics Papers
on Microfinance
Issue of 2010‒02‒13
one paper chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. Discrimination by Microcredit Officers: Theory and Evidence on Disability in Uganda By Marc Labie; Pierre-Guillaume Méon; Roy Mersland; Ariane Szafarz

  1. By: Marc Labie (Centre Emile Bernheim, CERMi, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and Faculté Warocqué, Université Mons-Hainaut.); Pierre-Guillaume Méon (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles, Brussels.); Roy Mersland (University of Agder, Norway and Centre Emile Bernheim, CERMi, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels.); Ariane Szafarz (Centre Emile Bernheim, CERMi, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles, Brussels.)
    Abstract: This paper studies the relationship between a microfinance institution and its credit officers when the latter are biased against a subgroup of the clientele. Using survey data from Uganda, we provide evidence that credit officers are more biased against disabled borrowers than other employees. In line with the evidence, we then build an agency model of a non-profit MFI and a discriminatory credit officer. Since incentives are costly, and the MFI’s budget is limited, even a non discriminating welfare-maximizing MFI may prefer paying smaller incentives, and letting its credit officer discriminate to some extent.
    Keywords: Microfinance, Discrimination, Credit Officers, Incentives.
    JEL: G21 O16 J33 L3
    Date: 2010–02
    URL: http://d.repec.org/n?u=RePEc:sol:wpaper:10-007&r=mfd

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