Abstract

When a business owner approaches a bank for a loan for their business they might hope that a well-established bureaucratic procedure would ensure that their application was processed with stipulated rules and impersonal criteria. They might expect that two bank officials, evaluating the same proposal for a loan, would reach the same decision. However, research shows that both quantifiable data and “gut feelings” are used in the decision. In this research, analysis of interviews with senior managers, and both individual and focus group interviews with bank loan officers, reveals that there are no set criteria or stipulated rules. The interviews demonstrate how and why nonquantifiable data is used, and why different bank officials can reach different conclusions on the same loan proposal. While these bank loan officers do not appear to be discriminatory against female business owners, the lending criteria and process allows significant room for discrimination. It appears questionable whether bank lending is seen as an ethical and fair process.