The interaction effect of gender and ethnicity in loan approval: A Bayesian estimation with data from a laboratory field experiment

In Bolivia, ethnic discrimination in microfinance prevents indigenous women from obtaining loans at the same rate as their non-indigenous counterparts.


Microfinance institutions (MFIs) tend to direct loans toward female recipients, a practice that can lead to benefits like better household nutrition, improved education, and decreased domestic violence

These affirmative action practices toward women, however, may fail to acknowledge the role of ethnicity in the financial policies of sustainable development. According to the World Bank, indigenous people in rural Bolivia are twice as likely as nonindigenous people to live in extreme poverty (51.6% vs. 22.5%). Likewise, indigenous women in Bolivia had lower education outcomes than any other group. For instance, the literacy rate for indigenous women is 15 percentage points lower than that of nonindigenous men. These factors create structural barriers for financial access. As a result, the empowering effects of microfinance loans may not reach women of different ethnicities at the same rate, particularly in countries with segregated indigenous populations. 

In this study, the authors conducted a hybrid laboratory-field experiment in Bolivia to evaluate whether credit officers reject microloan applications based on the interaction of the ethnicity and gender of potential borrowers. They delivered loan applications from hypothetical potential borrowers representing different ethnic and gender profiles to real credit officers, and then evaluated whether approval of the applications differed depending on the ethnicity and gender of the applicant.


Non-indigenous women have a higher probability of receiving preference for loan disbursement than indigenous women.

  • Non-indigenous women have twice the chance of obtaining a loan than non-indigenous men.
  • Indigenous women have 1.5 times the chance of obtaining a loan than non-indigenous men.
  • Indigenous and non-indigenous men have no significant differences in their chances of obtaining a loan.

These findings suggest that development agencies' and MFIs' efforts to serve women should account for ethnicity as a key factor in the financial policies of sustainable development. In order to be fully effective, such organizations must address the barriers to financial inclusion facing indigenous women, particularly in countries with a historically segregated indigenous population.


This study was conducted in the cities of La Paz and El Alto in Bolivia, where the extreme poverty rate among rural indigenous populations is twice as high as that of non-indigenous populations. It included 70 credit officers recruited from six Bolivian MFIs and compensated with $36.00 for participating.

Participating credit officers were given hypothetical credit applications from four potential borrowers: an indigenous man, a non-indigenous man, an indigenous woman, and a non-indigenous woman. These identities were illustrated through selected photos and names, as appearances and surnames serve as signals of ethnicity in Bolivia. Each application also contained information related to the payment capacity of the potential borrower, including the applicant's household information, historical credit reports and assets, and proposed payment plan.

The credit officers were initially asked to sort the applications according to the order in which they intended to review them. Next, the credit officers were asked to evaluate each application using a provided worksheet. After one hour, the credit officers were asked to reorder the applications according to their preferred order for loan disbursement.

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