CSEAS Friday Lecture Series | Incentivizing Lending to Women Entrepreneurs: Evidence from Vietnam

Open to Everyone

Please note: This lecture will be held in person and virtually on Zoom. The webinar is free and open to the public, but registration is required. Once you’ve registered, joining information will be sent to your email. Register for the Zoom webinar at: https://myumi.ch/9p7D9

In collaboration with a leading Vietnamese commercial bank, we evaluate the impact of two types of incentives to loan officers for the recruitment of women-owned or -led small- and medium-sized enterprises (WSMEs) as new borrowing clients. The average loan size in this segment is about $20,000 USD (5x GDP per capita). 50 bank branches employing 550 lending staff are randomly assigned to one of the following treatments: (1) a monthly multi-category contest; (2) a piece-rate incentive per loan; or (3) control. The multi-category contest is inclusive in that it rewards not just the very top performing agents, but also top performers among new agents (“rookies”) and most improved performers. We find that, overall, both interventions cause an increase in WSME lending, particularly in later periods, at largely similar magnitudes. In terms of spillovers, there may be moderate negative impacts on non-WSME lending early in the treatment period, but over time there is a significant, positive spillover on non-WSME lending. Our results have the potential to inform policies to promote (W)SME lending through optimizing loan officer incentives. More broadly, they provide some of the first experimental evidence from a high-stakes, real-world setting on whether competitive or piece rate incentives better improve the performance of high-skill workers completing uncertain tasks.