In last week’s post, we analyzed Access to Loans, with a focus on Credit Received. This week we flip the chart to look at Loan Denials (Credit Denied) using the IHS dataset. As in the last post, credit in this case still comprises of both those received in cash and kind including food items and other materials. We breakdown the outcome variables of interest (proportion of denial) by specific characteristics; gender, educational background and age. This will provide us with an understanding of the link between these characteristics and loan denial. Unlike last week, we will focus on denials at the national level and avoid breaking it down by districts or focusing on a region.
We will start by analyzing the mean denial by gender, this will be followed by the analyses of the proportion of denials by gender and educational background. We will then explore the mean age of denial and finally investigate the mean age of denial by age and education.
From Figure 1, on average, females are less likely to be denied a loan compared to their male counterparts. It is noticeable that the mean loan denial for male (90%) is higher than for females (43%) and this difference was statistically found to be significant. This follows common traditional belief that women are more trustworthy when it comes to issues relating to finances as compared male. However, it is important to raise questions to know whether gender disparity in terms of loan denial is based on merit. Does it happen to be that females mostly meet the requirements for loan acquisition or are they mostly favored in terms of access to loans? It is against this background that we wish to explore if there exist any difference that arise in loan denial based on education and age between gender.
Figure 1: Mean Denial by Gender
Figure 2 demonstrates the proportion of loan denied based on educational attainment by gender. Looking at the figure, one can notice that there was no female with a post bachelor’s (Masters) degree that was denied a loan. However, it came as a surprise that males with post bachelor’s (Masters) education were denied loans, this could be explained that there was only one respondent with a post bachelor’s degree and cannot be used to generalize for the whole group. With an exception of females with upper secondary education, females with no education (58%) and primary level education (54%) face less denial as compared males in the same education cohort with 83% and 90% respectively. Noticeably, the gap in loan denial between gender based on education is widest among those with lower secondary education with about 90% of males as compared to 10% of females. The figure further reaffirms that females face less denial as opposed males.
Figure 2: Proportion of Denial by Education and Gender
Let us now look at the mean age for those who were denied a loan. The figure shows that the mean age for a man denied loan, in our sample, is 47 years whilst that of female is 42 years. Although difficult to claim that age is a determinant in whether someone is denied a loan, we can infer that pool of women denied a loan are younger than the men in our sample. Is this deliberate or just a coincidence?
Figure 3: Mean Age of Denial by Sex
We now analyze the mean age of denial by educational level and sex. The figure tells us that, generally, the average age of denial is higher for males than females irrespective of the level of education. Once we focus on the education level where a person stopped by gender, the pattern that emerges is the age of men denied a loan is higher than women, in all categories (post bachelor is ignored in this case). This hints education level not being a reason for the age differential.
Figure 4: Mean Age of Denial by Education and Sex
From today’s analysis, we have learned that females are less likely to be denied loan than males. However, there is no clear pattern with regards to the relationship between educational background and chance of loan denial. We have also learnt that irrespective of the level of educational attainment, the women denied a loan are younger than their male counterparts.