| Abstract: |
In this paper we analyze the effect of loan officers' gender on the approval
of loans and, in particular, on their subsequent performance. Using detailed
bank information on a sample of close to half a million loans, we show that
female loan officers have, conditional on the risk score, around a 15% lower
delinquency rate than that of male officers. In addition to the original
scoring of the loans, we also have the recommendation of the expert system. We
find that the risk profile of applicants screened by male and female loan
officers is very similar, but conditional on risk score, women follow the
recommendations more often than men. Moreover, we find evidence of gender bias
in terms of a mistake-punishment trade-off, which could explain, at least in
part, women's higher compliance with the recommendations. Indeed, there is a
double standard in terms of the consequences for breaking the rules: errors,
in the form of delinquent loans as a result of not following the
recommendation of the system, are forgiven more often for male than for female
loan officers. |