This article undertakes an empirical analysis of enterprises which confirms that firms with female ownership participation are unconditionally less likely to use formal bank credit than firms with male ownership, however this gap disappears when controlling for observables firm’ characteristics (i.e., industry, size, ownership type, age, export orientation, foreign ownership, location). Further, female-owned businesses are not more likely to be rejected when applying for a loan nor more likely to be discouraged from applying than male-owned enterprises. The article analyses the extent to which observable characteristics do explain these results.
The regression analysis suggests that size, age, and a lower likelihood to be an exporter and have foreign ownership participation, explain why, prima facie, women-owned companies tend to be less likely to have access to finance. The article contains three additional findings. First, female entrepreneurs are less likely to own sole proprietorships than men. Second, female owned enterprises are more likely to innovate what could be explained by the fact that female entrepreneurs need to be especially capable in order to be able to enter the formal sector and in fact have characteristics that make them more attractive for financial institutions. Third, the article finds some limited support for the hypothesis of a “sectoral selection” as female ownership tends to be more prevalent in sectors that, on average across countries, tend to rely less on access to external finance
Earlier version available online at: http://elibrary.worldbank.org/content/workingpaper/10.1596/1813-9450-5571
