When is Capital Enough to Get Female Enterprises Growing? Evidence from a Randomized Experiment in Ghana
Standard models of investment predict that credit-constrained firms should grow rapidly when given additional capital, and that how this capital is provided should not affect decisions to invest in the business or consume the capital. The authors r...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110623170731 http://hdl.handle.net/10986/3470 |
| Summary: | Standard models of investment predict
that credit-constrained firms should grow rapidly when given
additional capital, and that how this capital is provided
should not affect decisions to invest in the business or
consume the capital. The authors randomly gave cash and
in-kind grants to male- and female-owned microenterprises in
urban Ghana. Their findings cast doubt on the ability of
capital alone to stimulate the growth of female
microenterprises. First, while the average treatment effects
of the in-kind grants are large and positive for both males
and females, the gain in profits is almost zero for women
with initial profits below the median, suggesting that
capital alone is not enough to grow subsistence enterprises
owned by women. Second, for women they strongly reject
equality of the cash and in-kind grants; only in-kind grants
lead to growth in business profits. The results for men also
suggest a lower impact of cash, but differences between cash
and in-kind grants are less robust. The difference in the
effects of cash and in-kind grants is associated more with a
lack of self-control than with external pressure. As a
result, the manner in which funding is provided affects
microenterprise growth. |
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