You’re likely to get a better loan from someone of the same sex, study finds » SMEInsider

You’re likely to get a better loan from someone of the same sex, study finds

Borrowers are given smaller loans, poorer interest rates and worse repayment terms by bank staff of the opposite sex, a 10-year study has found.

Research carried out in Albania by the Cass Business School, part of City University London, found that on average, both male and female lenders charged the opposite sex 0.35% to 4% more in interest and set 4% shorter repayment periods than with dealing with applicants of their own sex. Of the 5,000 loans analysed, the trend was most pronounced amongst newer recruits in the bank – those with more experience tended to take a more equal approach.

Whilst some feel that the findings can be attributed to different cultural values in Albania, the researchers point out that the branch analysed was from a much larger international bank, suggesting that this represents a wider problem.

Professor Thorsten Beck, who led the study, says that gender bias can be harmful both to consumers and to lenders and that banks need to be aware of when discrimination is likely to occur in order to guard against it.

We found gender bias creeps into the decisions of loan officers when they deal with small loan requests from customers on whom they have little information,” he said. “Loan officers have less discretion to indulge in their gender preferences when banks face greater competition from outside lenders, leading managers to more closely monitor loan decisions, or in large branches, where it is easier to replace staff.”