Gender in banking and mortgage behavior

ABSTRACT

Compared to men, women, even financial professionals, exhibit higher risk aversion. We exploit random assignment of clients to banking advisors (‘private bankers’) in a large Czech bank to study the effects of advisor gender on the probability of mortgage issuance and on the probability that a newly issued mortgage is insured, which we interpret as corresponding to risk averse mortgage behaviour. Male advisors do not substantially affect the chances that their clients will take a new mortgage. However, the mortgages that they issue are dramatically less likely to be insured, particularly so for female clients who never had an insured loan with the bank.

KEYWORDS:

• Banking advisors
• mortgage insurance

JEL CLASSIFICATION:

• G21
• G32
• J16

Acknowledgements

CERGE-EI is a joint workplace of the Center for Economic Research and Graduate Education, Charles University, and the Economics Institute of the Czech Academy of Sciences. Jurajda is Research Fellow at IZA, Bonn. This research has been supported by the Czech Science Foundation (grant P402/12/G130).

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ A separate body of work focuses on gender discrimination and gender differences in the availability of commercial or consumer credit; see Alesina, Lotti, and Mistrulli (2013), Asiedu, Freeman, and Nti-Addae (2012) or Bellucci et al. (2010).

² The advisors have little control over mortgage interest rates, which are set according to the bank’s formulaic rate policy.

³ We started collaborating with the bank in May 2013, while the campaign was being prepared.

⁴ The data dropping appears random with respect to the gender structure of the client–advisor pairs.

⁵ Balancing tests are available upon request.

⁶ We do not ask whether private bankers sell additional mortgages that would not be sold in their absence.

⁷ All of the regressions presented in this section also control for the number of months after assignment over which we observe each client. We present ordinary least squares (OLS) coefficients. We have also estimated Logit specifications where the probability of purchasing a mortgage is modelled as . The Logit probability derivatives were practically identical to the OLS coefficients presented here.

⁸ We have also estimated the effect of advisor gender on mortgage size, and the estimated effects were quantitatively small and did not reach conventional levels of statistical significance. We do not have data on interest rates, but these follow the bank’s general formulaic rate policy.

⁹ Prior to the year 2000, the mortgage market was nearly nonexistent in the Czech Republic. According to the Czech National Bank, the volume of household mortgage debt increased over 22 times between 2003 and 2013.

Additional information

Funding

This research has been supported by the Czech Science Foundation [grant P402/12/G130].