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Title: Verschijningsvorm van glazen plafonds bij financiering van het Nederlands MKB
Authors: Coomans, L
Keywords: credit rationing
gender effect
loan conitions
risk aversion
Issue Date: 1-Nov-2016
Publisher: Open Universiteit Nederland
Abstract: In this enquiry the effect of gender on loan sums and conditions in dutch SME finance has been researched. Detailled information from a local Rabobank was retrieved out of 3,502 loan applications which were processed during the financial crisis (2009-2015). With reference to existing literature not only the level of detail of research data was distinctive, the simultaneous involvement of gender effects among applicants, loan officers and their interrelation (pairs applicant - banker) was as well. In Behavorial Finance theory information asymmetry and psychology play an important part in limited rational decision making having characteristic differences between male and female. Risk aversion, motivation and intuition could lead to limitation of gender neutrality. There is an important difference between discrimination and permitted differentiation between heterogeneous groups. A sixfold hypothesis test was performed based on OLS-regression of applicants’, bankers’ and pairs’ gender on loan sums, approved part, processing time, interest, commission and fees. For financial and non-financial covenants a Negative Binomial regression analysis was applied for the determination of gender effects in that type of loan conditions. Gender effects were controlled for various loan characteristics and distinguishing marks (identified as the 5 Cs) of financed companies. Results indicated that there were gender differences among applicants, bankers and pairs both with respect to loan and loan conditions. Female applicants obtained lower loan sums and were charged higher commission but on the contrary they were constrained less covenants than their male counterparts. Female loan officers processed their applications quicker, approved higher average loan sums, discounted more interest, but they constrained more covenants per application. Mixed gender pairs differed from pairs consisting of only males by means of less financial covenants and a lower processing time. Negatively significant moderation effects on loan sums and conditions existed caused by poorer reimbursement perspectives, smaller sized companies and applications for working capital and real estate. In many regression models activities in agriculture, horticulture and fishery affected loan conditions in a positive way. Besides the appearance of some singular effects it was argued that results were in accordance with existing literature. Female applicants were expected to apply for lower loan sums because of their motivation to keep their enterprises small and because of their cognitive dissonance when making contracts with uncertain outcome. It was not expected that controlled for company characteristics they would pay higher commissions. Female applicants were favored with respect to processing time and amount of covenants constrained, so there was no evidence of discrimination. Based on literature about gender differences in risk aversion it was forseen that female loan officers would constrain more covenants in order to monitor better the perceived higher risks. Higher loan sums, interest discounts and lower processing times could therefore only be explained as i) a result from obliqueness in the allocation of applications by sectors applying for higher loan sums, ii) bankers’ freedom in defining loan conditions caused by a lack of decision-making procedures for loan conditions and iii) an intuitively perceived lower risk than calculated by the rating model. Further it was argued that working capital can be recited on a daily basis and real estate finance is often secured by a mortgage which explains the lower numbers of covenants constrained by bankers. The research showed some forms of ceilings in dutch SME finance. There appeared some gender differences, probably caused by behavorial aspects. However, there was no proof of ‘glass’ ceilings (detrimental to females). A remark has to be made that some of the regression models used had little explanatory value and the amount of female cases was relatively small. Nevertheless a recommendation was made in order to limit differentiation. Standardising decision-making rules, linking covenant constraints and unsecured liability to tarification and reviewing the ratingsystem used for start-ups can contribute to more transparancy in dutch SME financial decision making. Additional qualitative research on these topics is recommended.
Appears in Collections:MSc Management Science

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