Member Article

Banks unconsciously discriminate against women

Businesswomen face potential discrimination when applying for bank loans, preventing them from developing successful businesses, a recent study has suggested. The Economic and Social Research Council, who funded the research, is calling for changes in the training of bank loan officers and small business advisers in order to address this imbalance. Despite a number of public policy initiatives to increase female self-employment, only 15% of businesses are women-owned and the 26% share of self-employed women has not changed in 15 years. This contrasts sharply with other countries, particularly the USA, where female self-employment has risen each year since 1976 and currently stands at 39.6%. “A fresh study of how gender impacts on the lending decisions of a UK bank was long overdue, particularly in the light of widespread automated credit scoring and over half of all bank employees now being women,” said Professor Fiona Wilson, one of the three researchers who carried out the study. “It’s particularly timely, as other recent research has found that female owned businesses pay a 1.1 per cent point premium relative to male owned businesses.” Many banks in the UK regard women-owned businesses as an important market. However, the research suggested that lending decisions by individual bank loan officers can reflect biased gender perceptions and opinions. It also found that bias is just as likely among male and female officers. Professor Wilson, who is based at the University of Glasgow, added: “Gender really does permeate and affect women’s experience of business ownership. Our observations suggest that because of differences in age and industry experience, women can be viewed as possessing significantly less human and social capital prior to setting up their businesses than men.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .