Gender and Banking: Are Women Better Loan Officers?

Abstract

We analyze gender differences associated with loan officer performance. Using a unique data set for a commercial bank over the period 1996 to 2006, we find that loans screened and monitored by female loan officers show a statistically and economically significant lower likelihood to turn problematic than loans handled by male loan officers. This effect comes in addition to a lower risk of female borrowers and cannot be explained by sample selection, experience differences between female and male loan officers, or different workload of male loan officers. Our results seem to be driven by differences in monitoring between female and male loan officers as both are equally good at screening based on observable as well as on unobservable borrower characteristics. This suggests that gender indeed matters in banking.

Keywords: Behavioral banking, loan officers, gender, loan default, monitoring, screening

JEL Classification: G21, J16