Female and male risk aversion: An empirical study of loan officers' assessment of SME loan applications

Abstract

Purpose

The aim of the paper is to analyse female and male loan officers' (LOs) risk aversion as they assess different types of small- and medium-sized enterprises' (SMEs) loan applications.

Design/methodology/approach

The data were gathered from a sample of 75 Swedish LOs, using the repertory grid technique and related questions. The data were analysed statistically.

Findings

The findings demonstrate that female LOs focus more on collateral (used as a proxy for risk aversion) in their evaluations of first-time loan applications than male LOs. However, the findings also suggest that there are no significant differences between the two groups as far as risk aversion when they evaluate additional loan applications. The other variables controlled for (age, tenure, insight, education, and location) did not significantly affect the LOs' risk aversion.

Research limitations/implications

The study might have benefited from the use of complementary data collection approaches. Access to actual assessment and decision-making procedures could have increased the understanding of female and male LOs' attitudes toward risk.

Practical implications

The findings suggest that by the use of female-male LO teams, banks may achieve more balanced assessments of SMEs' loan applications.

Originality/value

To the authors' knowledge, the literature has not explicitly addressed risk aversion among female and male LOs with respect to different types of bank loans. Moreover, the authors investigated risk aversion in the context of standardised assessments procedures used to reduce exposure to credit risk.

Citation

Rad, A., Yazdanfar, D. and Öhman, P. (2014), "Female and male risk aversion: An empirical study of loan officers' assessment of SME loan applications", International Journal of Gender and Entrepreneurship, Vol. 6 No. 2, pp. 121-141. https://doi.org/10.1108/IJGE-02-2013-0012