Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns

This paper analyzes data from a randomized experiment on mean returns to capital in Sri Lankan micro-enterprises. The findings show greater returns among men than among women; indeed, returns were not different from zero for women. The authors expl...

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Bibliographic Details
Main Authors:	de Mel, Suresh, McKenzie, David, Woodruff, Christopher
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO BANK ACCESS TO BANK LOANS ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO FINANCE ACCESS TO FORMAL FINANCE ACCOUNTING ACHIEVEMENT MOTIVATION AGRICULTURE AMOUNT OF CAPITAL ASSET ACCUMULATION ASSET OWNERSHIP BANKS BEST PRACTICES BORROWING BUSINESS EXPERIENCE BUSINESS NETWORKS BUSINESS OWNER CAPITAL CONSTRAINTS CAPITAL FLOWS CAPITAL INJECTION CAPITAL INVESTMENTS CAPITAL MARKET CAPITAL STOCK CAPITAL STOCKS CARE FOR CHILDREN CASH PAYMENT COLLATERAL CONSUMERS CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKETS CREDIT UNIONS CURRENT ACCOUNT CURRENT EXPENDITURE CUSTOMER BASE DECISION MAKING DEMAND FOR CREDIT DEPOSIT ACCOUNT DEVELOPING COUNTRIES DEVELOPMENT BANK DEVELOPMENT ECONOMICS DIMINISHING RETURNS DUMMY VARIABLE DUMMY VARIABLES DURABLE DURABLE ASSETS DURABLE GOODS EARNINGS ECONOMIC DEVELOPMENT ECONOMIC EFFICIENCY ECONOMIC GROWTH EDUCATION LEVELS ELDERLY PARENTS EMPOWERMENT ENTREPRENEUR ENTREPRENEURIAL ABILITY ENTREPRENEURIAL ATTITUDES ENTREPRENEURS EQUAL AMOUNTS EQUALITY EQUIPMENT EQUIPMENT PURCHASE EQUIPMENT PURCHASES EXPENDITURE EXPENDITURES FAMILY MEMBERS FATHER FEMALE FEMALE BORROWERS FEMALE ENTERPRISE FEMALE ENTERPRISES FEMALE ENTREPRENEURS FEMALE WORKERS FEMALE-OWNED BUSINESSES FEMALES FINANCIAL ASSETS FINANCIAL INSTITUTION FINANCIAL LITERACY FINANCIAL SERVICES FINANCIAL SUPPORT FIRM PERFORMANCE FIXED DEPOSIT FORMAL CREDIT FORMAL LOAN FUTURE RESEARCH GENDER GENDER ANALYSIS GENDER DIFFERENCE GENDER DIFFERENCES GENDER EQUALITY GENDER GAP GENDERS HEALTH CARE HOUSEHOLD ASSET ACCUMULATION HOUSEHOLD BARGAINING HOUSEHOLD BUSINESS HOUSEHOLD EXPENDITURE HOUSEHOLD EXPENDITURES HOUSEHOLD INCOME HOUSEHOLDS HUSBAND HUSBANDS ILLNESS INCOMPLETE MARKETS INFLATION INITIAL FUNDING INITIAL INVESTMENTS INSTRUMENT INSURANCE INSURANCE MARKETS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVENTORIES INVENTORY INVESTING INVESTMENT BEHAVIOR INVESTMENT DECISIONS INVESTMENT OPPORTUNITIES LABOR FORCE LABOR FORCE PARTICIPATION LABOR FORCE SURVEY LABOR HOURS LABOR MARKET LENDERS LIQUIDITY LOAN LOAN AMOUNT LOANS FROM FAMILY LOTTERY LOW-INCOME MARKET INTEREST RATE MARKET INTEREST RATES MARKET VALUE MICRO-ENTERPRISES MICRO-LOANS MICROCREDIT MICROENTERPRISES MICROFINANCE MOTHER OLDER CHILDREN PHYSICAL CAPITAL POLITICAL ECONOMY POVERTY ALLEVIATION PRICE INDEX PRICE INDICES PRIVATE BANK PRODUCTION FUNCTION PRODUCTIVITY PROFITABLE INVESTMENT PROFITABLE INVESTMENTS REINVESTMENT RESEARCH ASSISTANCE RESOURCE ALLOCATION RESPONSIBILITIES RETIREMENT RETURN RETURN ON INVESTMENT RETURNS RISK AVERSE RISK AVERSION RISK-AVERSE INDIVIDUALS SALES SAVINGS SAVINGS ACCOUNT SELF EMPLOYMENT SELF-EMPLOYMENT SMALL ENTERPRISES SOURCE OF INCOME SOURCE OF INFORMATION START-UP SUPPLY OF CREDIT TYPES OF ASSETS UMBRELLA ORGANIZATION VILLAGE WAGE WEALTH WOMEN ENTREPRENEURS WORKING AGE WORKING CAPITAL Microdata Set
Online Access:	http://documents.worldbank.org/curated/en/2008/10/9903470/women-more-credit-constrained-experimental-evidence-gender-microenterprise-returns http://hdl.handle.net/10986/6933

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Summary:	This paper analyzes data from a randomized experiment on mean returns to capital in Sri Lankan micro-enterprises. The findings show greater returns among men than among women; indeed, returns were not different from zero for women. The authors explore different explanations for the lower returns among female owners, and find no evidence that the gender gap is explained by differences in ability, risk aversion, or entrepreneurial attitudes. Differential access to unpaid family labor and social constraints limiting sales to local areas are not important. However, there is evidence that women invested grants differently from men. A smaller share of the smaller grants remained in the female-owned enterprises, and men were more likely to spend the grant on working capital and women on equipment. The gender gap is largest when male-dominated sectors are compared with female-dominated sectors, although female returns are lower than male returns even for females working in the same industries as men. The authors examine the heterogeneity of returns to determine whether any group of businesses owned by women benefit from easing capital constraints. The results suggest there is a large group of high-return male owners and a smaller group of poor, high-ability, female owners who might benefit from more access to capital.

Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns

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