Both, either, or neither? Taste-based and statistical discrimination in personal loan applications

Using cross-sectional data on over 51,000 individuals from a large public sector bank in India, we examine the determinants of loan rejection. The findings indicate that females with high credit scores are less likely to be rejected, suggesting evidence of favourable treatment. Additionally, applicants with higher incomes are less likely to face rejection, highlighting the presence of statistical discrimination. Various robustness checks support these conclusions. The paper concludes with policy implications drawn from the analysis.

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Publication Details

Journal
Modern Finance
Published
2025-11-24
DOI
https://doi.org/10.61351/mf.v3i4.415
Primary Topic
Microfinance and Financial Inclusion
Type
article
Field-Weighted Citation Impact
0.00
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article

Both, either, or neither? Taste-based and statistical discrimination in personal loan applications

Saibal Ghosh
Modern Finance
Microfinance and Financial Inclusion
article

Both, either, or neither? Taste-based and statistical discrimination in personal loan applications

Saibal Ghosh
article en

Abstract

Using cross-sectional data on over 51,000 individuals from a large public sector bank in India, we examine the determinants of loan rejection. The findings indicate that females with high credit scores are less likely to be rejected, suggesting evidence of favourable treatment. Additionally, applicants with higher incomes are less likely to face rejection, highlighting the presence of statistical discrimination. Various robustness checks support these conclusions. The paper concludes with policy implications drawn from the analysis.

Modern FinanceVol. 3(4)
Qatar Central Bank (QA)
Openalex Percentile: Top 56%
Microfinance and Financial Inclusion
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