Gender Issues in Microfinance and Repayment Performance: The Case of a Nicaraguan Microfinance Institution
Conventional wisdom in microfinance holds that women are better risks than men. This is clearly an empirically testable hypothesis. In the present work, a logit model controlling for a range of borrower and loan characteristics was carried out to assess the validity of this widely held view. The study includes a sample of loans disbursed by a Nicaraguan microfinance institution during the years 2003-2004. A dichotomous dependent variable is created, taking the value of 1 if the credit turned out to be of the best quality i.e. an “A” credit by Nicaraguan regulations, and 0 otherwise. The dependent variable is regressed on variables summarizing the characteristics of the borrower and the loan to investigate the impact of gender on repayment performance. The results provide significant evidence that female client’s repayment performance is in fact better than that of male’s at the conventional levels of significance. However, the results also show that the perceived difference in gender risk is lower than what popular wisdom would suggest when borrower occupation and other characteristics are taken into account. We conclude that other characteristics of the borrower and the loan can have a similar or larger impact than gender when it comes to repayment performance.
Keywords: Microfinance, Micro-Credits, Gender, Repayment Performance
School of Management, University of Surrey
Department of Economics, University of Sheffield