A smile boosts the chances of getting a microloan, say Stanford psychologists

Thursday, August 20, 2015

Positive emotions seem to drive decision-making in the world of microlending, Stanford psychologists have found.

In other words, excitement rather than guilt is the emotion that is more often experienced by someone who gives a microloan to another person, according to a study by Brian Knutson, an associate professor of psychology, and Alexander Genevsky, a doctoral student in psychology.

Knutson and Genevsky found that the brain's emotional mechanisms – "affect," or the experience of feeling or emotion – seem to play a key role in microlending decisions. The research, published in the journalPsychological Science, is the first attempt to combine big data and neuroimaging on this topic.

Microfinance offers financial services to low-income people or those who do not have access to typical banking services. A loan can help those on the bottom of the economic ladder become upwardly mobile if, for example, the loan helps someone in a developing country to launch a new business, improve housing or fund education.


Source: Stanford (link opens in a new window)

financial inclusion, microfinance, research