Entrepreneurs' gender and financial constraints: Evidence from international data

Abstract

This paper studies gender discrimination against entrepreneurs by financial institutions. Based on the Business Environment and Enterprise Performance Survey (BEEPS) that covers firms in several countries of Western Europe as well as in the transition countries of Eastern Europe, our analysis suggests that femalemanaged firms are less likely to obtain a bank loan compared with male-managed counterparts. In addition, there is some evidence that female entrepreneurs are charged higher interest rates when loan applications are approved. Disaggregation of the sample by country groups suggests that these results are driven by firms in the least financially developed countries of the region.

Does Gender Matter For Firm Performance? Evidence From Eastern Europe And Central Asia

“…Muravyev, Schafer and Talavera (2007) show that once controls are introduced, there is a significant difference in the interest rate paid by men v. women.…”

“…Muravyev, Schafer and Talavera (2007) have shown that women are (5.4%) less likely than men to get a loan, when correcting for selection on whether the firm needs a loan, and controlling for the profit of the firm, capacity utilization, age, and competition faced by the firm, as well as industry and country fixed effects. They note the importance of controlling for capacity utilization and age; if women are operating firms that are younger and at lower capacity utilization than men 19 and this could influence the financial decisions of bankers.…”

“…They found that the applications were significantly more likely to be declined or restricted if the name was that of a woman than a man. In their study using data from Business Environment and Enterprise Performance Survey (BEEPS) from Europe, Muravyev et al (2007) find that female managed firms have a 5.4 percent lower probability of securing a bank loan than male managed firms. They also evaluate existence of financial constraints by looking at interest rates and find that female managed firms on average pay 0.6 percent higher interest rates than their male counterparts.…”

Connectedness and SME Financing in Post-Communist Economies: Evidence from Uzbekistan

“…A cross-country empirical study by Muravyev et al (2009) found that, compared to male-managed companies, female-managed companies were less likely to get formal credit; hence, the coefficient of this variable is expected to have a negative sign. Regional dummy variables are used to reflect the higher per capita income level in Tashkent, the capital city and financial centre of the country.…”

“…Consequently, two alternative models with different sub-samples are estimated to deal with the issue. The first sub-sample is conditioned upon applying for formal finance, and the second conditioned upon expressing a need for external finance (Cavaluzzo et al, 2002;Blanchard et al, 2008;Muravyev et al, 2009). …”