Banks’ Approach to Women…

According to a recent study conducted by the European Bank for Reconstruction and Development (EBRD), in Turkey, entrepreneurs seeking loans from banks are discriminated based on their gender.

Conducted with 334 Turkish bank employees in order to reveal whether there is gender-based discrimination towards applicants from the SMEs, the study results showed that the loan requests by the borrowers are unconditionally approved, regardless of their gender, however, loan officers are 26% more likely to require a guarantor from female entrepreneurs compared to men.

In my opinion, the EBRD should have interviewed a larger sample group, nevertheless the results gives us a rough idea about the situation. But basically, the study tells us that discrimination mainly affects women entrepreneurs who work in male-dominated sectors. For example, young loan officers tend to ask for a guarantor from female entrepreneurs as opposed to officers over the age of 45, which seems quite interesting to me because Generation Y is considered to be more liberal than our generation, they tend to value diversity, self-expression, and they are open to new ideas and new ways of doing things. But the study shows us that they are rather sceptical towards women.

“A Study That Should Be Taken Seriously.”

The study also says that female entrepreneurs are required to list their fathers or brothers as guarantors, which demeans the social status of these women. Perhaps their fathers or brothers do not treat these women with contempt, or they don’t think that banks would not provide them with any loan if it weren’t for them, I can nevertheless say that it is a serious pressure on women’s autonomy. Also, we shall consider the fact that when women entrepreneurs give up on their project because they can’t find a guarantor, this leads to the loss of profitable ventures, and less tax revenue for the government.

There are three suggestions to prevent all this:

The first suggestion is to include senior loan officers in lending processes.

The second one involves the managers of each branch assigning performance targets, such as ‘offering business loans to women without a guarantor’, to their teams and hold branches that fail to meet this target accountable.

The third suggestion sounds quite interesting:

Using algorithmic decision-making methods to determine the suitable applicants. But, in my opinion, this method could cause the credit giving schemes to go completely digital, ignoring the human experience and incentive in the process.

Although a small sample group was used by the EBRD to prove the allegation of gender-based discrimination by younger banking professionals in the Republic of Turkey, which adopted the equality of men and women as a founding principle, I believe this assertion is worthy of further research.