Journal of Financial and Quantitative Analysis Vol. 60 No. 4 2025

Attention Constraints and Financial Inclusion

Bo Huang¹; Jiacui Li²; Tse-Chun Lin³; Mingzhu Tai⁴; Zoey Yiyuan Zhou⁵

¹ Remin University School of Finance · ² University of Utah David Eccles School of Business. · ³ Zhejiang University School of Economics, and University of Hong Kong Faculty of Business and Economics · ⁴ University of Hong Kong Faculty of Business and Economics, · ⁵ Hong Kong University of Science and Technology Academy of Interdisciplinary Studies Division of Environment and Sustainability

Abstract

We show that attention constraints on decision-makers create barriers to financial inclusion. Using administrative data on retail loan-screening processes, we find that attention-constrained loan officers exert less effort reviewing applicants of lower socioeconomic status (SES) and reject them more frequently. More importantly, when externally imposed increases in loan officers’ workloads tighten attention constraints, loan officers are even more prone to quickly reject low-SES applicants but quickly accept very high-SES applicants without careful review. Such selective attention allocation further widens the approval rate gap between high- and low-SES applicants—a unique prediction of this attention-based mechanism.

DOI

10.1017/s0022109024000565

Volume

60

Issue

4

Pages

1727-1759

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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