GENDER GAP IN CONSUMER LOAN PERFORMANCE: EVIDENCE FROM FINTECH LENDING IN AN EMERGING ECONOMY

No Thumbnail Available

Date

2023

Authors

Tinic, Murat
Tumer-Alkan, Gunseli
Karaman, Hakki Deniz

Journal Title

Journal ISSN

Volume Title

Publisher

Emerald Group Publishing Ltd

Open Access Color

OpenAIRE Downloads

OpenAIRE Views

Research Projects

Organizational Units

Journal Issue

Abstract

This study examines whether fintech lending further enhances or mitigates the gender-based differences in consumer loan performance in an emerging market. Using a proprietary dataset of over 5.5 million consumer loans offered by the fifth-largest bank in Turkey and its fintech subsidiary, the authors first document a significant gender gap in average loan performances. In line with the previous empirical findings, men are more likely to default on their debt. The average difference in loan performance is around 10 basis points, indicating a statistically and economically significant magnitude even after controlling for an exhaustive list of demographic and credit characteristics. Next, the authors show that the gender gap in loan performance is more pronounced in areas where women have more outside options in terms of social and economic opportunities. Specifically, the authors observe that gender-based differences are predominantly evident in cities with higher divorce rates, lower young and elderly dependence, smaller household sizes, and higher labor force participation of women. Since the child and elderly care duties disproportionately influence women's ability to participate in economic life, their ability to find resources to pay their loans in a timely manner improves more in comparison to men in areas where women face fewer restrictions to seek local economic opportunities outside the household. Finally, the authors document that fintech loans partially mitigate the gender-based differences in consumer loan performance in those cities. This result suggests that the developments in financial technology can reduce the inefficiencies associated with human involvement in credit decisions, narrowing the gender gap in loan outcomes to the extent that these gaps are attributable to the supply-side factors that involve human judgment and biases.

Description

Keywords

Banking, credit, financial technology, Credit, automated lending, gender, Credit, emerging market

Turkish CoHE Thesis Center URL

Fields of Science

Citation

0

WoS Q

N/A

Scopus Q

N/A

Source

Fintech, Pandemic, and The Financial System: Challenges and Opportunities

Volume

22

Issue

Start Page

77

End Page

92