Gender and micro-credit: who repays? Evidence from a Canadian individual-lending approach

The emergence of micro-credit and its ability to reduce poverty through unique lending models has gained the attention of the banking world and academia alike. The growing literature in micro-finance affirms the validity and benefits of micro-credit programs on multiple levels and in various communities and contexts. Many institutions offering micro-credit through group-lending models have shown that risks of default are reduced through joint liability and lending to women. To date, there is a limited amount of research investigating repayment by gender using individual-lending models, particularly in the Canadian context. This study assessed the application of micro-credit to both women and men over a 10-year period at a Canadian micro-finance institution through an individual-lending model, making the study unique, both in terms of the availability of gender-based data and its relationship to the Canadian context. The results from a logistic regression model affirmed that the repayment rate among women borrowers was slightly higher than the repayment rate among men borrowers. As the research findings were based on individual-lending models, these observations suggest that women are slightly a better credit risk for institutions, even in the absence of joint liability in a group setting.