Association for Public Policy Analysis & Management

In the 45 years since women obtained the right to apply for credit with the passage of the Equal Credit Opportunity Act (ECOA), little research has been devoted to how men and women perceive and interact with most credit markets. Using a nationally representative survey designed to uncover more about consumers’ financial lives, I disaggregate banking and credit survey responses by gender to study differences among consumers, specifically any differences in credit perceptions and ease of access.

The existing literature on gender differences in borrowing primarily focuses on mortgages, with research showing that women are more likely to be subprime mortgage borrowers (Fishbein and Woodhall, 2006) and to pay more for all types of mortgages (Cheng et al., 2011). Continuing, these observed differences in credit pricing and usage have been attributed to different financial literacy levels between males and females (Mottola 2013). By leveraging a large survey- instead of administrative data- I identify consumers’ perceptions about credit use and access. The Survey of Household Economic Decisionmaking (SHED) is an annual survey conducted by the Federal Reserve Board. It measures the economic well-being of U.S. households, and includes subjects such as economic fragility, access to credit, financial literacy, and savings and retirement. Utilizing this large survey dataset is necessary in order to help explain why such gender differentials exist in mortgage and credit markets.

Preliminary results show significant differences in males and females with respect to the decision to delay applying for credit, even though the consumer desired more credit. Continuing, females were significantly more likely to delay applying for credit because they believed they would be denied (18.9% to 17.3%). These empirical results contribute to the gender and credit literature by identifying aspects of credit use that drive credit disparities among US consumers. This analysis presents new evidence on the gendered differences in credit perceptions, and gendered outcomes in credit card, auto and mortgage borrowing. Additionally, it aids policymakers in pinpointing the origins of gender credit disparities.