Gender and bank lending after the global financial crisis: are women entrepreneurs safer bets?

Abstract

Using gender as a theoretical framework, we analyse the dynamics of bank lending to small and medium sized enterprises (SME) in the aftermath of the 2008 Global Financial Crisis. Using six waves of the SME Finance Monitor survey, we apply a formal Oaxaca-Blinder decomposition to test whether gender impacts upon the supply and demand for debt finance by women. Reflecting established evidence, we found women had a lower demand for bank loans; contradicting accepted wisdom however, we found that women who did apply were more likely to be successful. We argue that feminised risk aversion might inform more conservative applications during a period of financial uncertainty which may be beneficial for women in terms of gaining loans. However, we also uncover more subtle evidence suggesting that bank decisions may differ for women who may be unfairly treated in terms of collateral but regarded more positively when holding large cash balances.

Pivoting to stay the course: How women entrepreneurs take advantage of opportunities created by the COVID-19 pandemic

“…Following the 2008 financial crisis, one study concluded that women entrepreneurs dealt with the resulting recession in a defensive manner, while men used an offensive approach (Cesaroni et al, 2015). Another study of the global financial crisis found that women had lower demand for bank loans but were more successful, concluding that feminised risk aversion might inform the more conservative approach (Cowling et al, 2019). Alternatively, a comparative study of sole proprietors during the financial crisis showed women personally take care of house and family, and therefore, had more difficulty with work-family conflict and internal psychological balance than their male peers (Cesaroni et al, 2018).…”

Stemming the gender gap in STEM entrepreneurship – insights into women’s entrepreneurship in science, technology, engineering and mathematics

“…Kuschel and Lepeley (2016) argue that some investors (e.g., public funds, business angels, venture capitalists) might not fund women-led startups because of the potential for the leader to become pregnant and make the startup a lower priority, at least temporarily. However, recent studies conducted after the global financial crisis show that women may be less risky loan payers and therefore safer bets for financial institutions (Cowling et al 2019). Women are found to be more successful at raising money in crowdfunding platforms, as they seem to be better communicators (Gorbatai and Nelson 2015).…”

Bank credit constraints for women‐led SMEs: Self‐restraint or lender bias?

“…There is a wide literature in the field of entrepreneurship that investigates whether the manager's gender is a major factor affecting firms' inclination to access bank credit, as well as whether lenders behave differently when providing loans to male and female borrowers. Most of these papers, however, provide mixed evidence on the existence of gender issues in access to finance (Rostamkalaei et al, 2018), and are usually focused on single concerns (such as borrower discouragement to apply for bank loans, and loan rejection perpetrated by the lenders) or investigate the behavior of SMEs chartered in specific countries (see, for example, Cowling et al, 2019;Presbitero et al, 2014). Hence, more comprehensive and more conclusive studies on the problems faced by SMEs when accessing bank lending are still needed by policy-makers, especially because of the acknowledged importance of small businesses for the real economy in Europe.…”

“…Third, the vast majority of existing studies tend to focus on single issues, rather than jointly considering a range of reasons, arising from the demand or the supply side of the bank lending market. In this regard, it is worth mentioning that most scholars in the field have investigated the issue of borrower discouragement to apply for bank loans, and loan rejection perpetrated by the lenders (see, for example, Cowling, Marlow, & Liu, 2019;Moro et al, 2017;Presbitero, Rabellotti, & Piras, 2014). What is missing, though, to the best of our knowledge, is a study that jointly assesses a variety of motivations (from the borrowers' perspective) not to apply for loans, as well as a range of adverse outcomes (of applications for bank lending) experienced by the SMEs.…”

“…Therefore, the perception of such issues might significantly impact on the firm's behavior leading, for instance, to discouragement conduct (Mac an Bhaird, Vidal, & Lucey, 2016). Interestingly, recent studies on access to finance have limited their analysis to the post-global financial crisis period in a specific country only (Cowling et al, 2019), or have exploited the country heterogeneity characterizing their data regardless of the time-specific macroeconomic conditions (Mascia & Rossi, 2017). To the best of our knowledge, we are thus the first to explore whether differences in macroeconomic conditions affect the self-restraint behavior of women-led firms, as well as the outcomes of their bank loan applications, focusing on opposite dynamics of the business cycle occurring during and after a particular turbulent period across our sampled countries.…”