Gender and Banking: Are Women Better Loan Officers?

This study is, to the best of our knowledge, the first to explicitly consider the role of the gender of the lender by analyzing performance differences across loan officer gender. Our main finding is that gender indeed seems to matter in banking: female loan officers have statistically and economically significantly lower arrear probabilities associated with their borrowers. This novel result holds for both female and male borrowers, with the effect being more pronounced for female borrowers, and is robust to a series of additional tests. . . 

Our results are consistent with female loan officers being better at building trust relationships. We offer two pieces of evidence for this. First, female loan officers have always—independent of their experience—a performance advantage with female borrowers, while they build up this advantage with male borrowers only over time with experience. Second, female loan officers have no performance advantage with legal entities where establishing a trust relationship is more difficult. This is consistent with experimental evidence that women are more likely to agree with women in ultimatum games (Eckel and Grossman, 2001). It is also consistent with the results in Adams and Ferreira (2009) that women seem to strengthen monitoring when joining corporate boards and shows that in addition to career concerns, compensation schemes, and information asymmetries (Agarwal and Wang, 2009), gender can play an important role in loan officer performance.

The study is by Beck, Behr & Guettler (Review of Finance).