Donors discriminate on the basis of attractiveness, skin color, and weight, preferring borrowers who are more attractive, who have lighter skin, and who are not overweight. The effects are statistically significant and robust, persisting across a variety of specifications and conditional on a full range of controls including country fixed effects, MFI fixed effects, economic sector and activity fixed effects, and date fixed effects. The effects are quantitatively significant. A borrower at the 75th percentile in terms of skin color (darker skin) is estimated to require 20% more time to have his or her loan funded than a borrower with lighter skin at the 25th percentile; similarly, a borrower at the 75th percentile in attractiveness (more attractive) requires almost 25% less time to receive full funding.
Donors appear to strongly prefer lending to women compared to men, making group loans instead of individual loans, and lending to borrowers from poorer countries. These preferences are in part driven by the substantial evidence circulated in the media on the success of microfinance institutions which concentrate on group lending and lending to women. However, evidence on the strong impact of attractiveness, skin color, and weight are difficult to reconcile with any consensus or even popular evidence on the value of increased capital access to more attractive, lighter skinned, skinny individuals when it comes to economic development.