Doctoral Dissertation Research: Discretion and Decision-making in Microlending

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This project investigates how, at microlenders, an ascriptive characteristic of loan officers and applicants may affect credit decisions that are made through nominally neutral, standardized risk assessment practices. In places with high poverty levels, microlenders make small loans to nontraditional borrowers using more forgiving criteria than regular banks. Policy analysts and donor organizations have portrayed microcredit as an inclusive solution to poverty. The role of loan officers, however, who decide which applicants are approved or rejected in the first place, often is overlooked. This study examines the effect of an ascriptive characteristic on this decision and thus its potentially consequential effects on who gets loans and on what terms.Research questions for this project are: (1) How do loan officers determine creditworthiness among applicants, and how is this evaluation affected by their values on an ascriptive characteristic? (2) How does the standardization of risk assessment affect the exercise of loan officers’ discretion and the process of credit allocation? These questions are addressed with a combination of qualitative and quantitative data collected over the course of a major institutional transformation, including administrative data, interviews, ethnographic observations, and written texts. Collection of these data is made possible through access to a microcredit provider.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.