Gender, Access to Finance, Occupational Choice, and Business Performance

Research output: Working paper

Authors

Colleges, School and Institutes

External organisations

  • Durham University

Abstract

We present a theoretical and empirical analysis of the links between the gender of an entrepreneur, access to finance, occupational choice, and business performance. Our theoretical model predicts that, when lenders discriminate against women entrepreneurs, the average entrepreneurial skill of women who become entrepreneurs or enter paid employment as managers is higher than that of their men counterparts. This suggests that the firms owned or managed by women should perform better than the firms owned or managed by men, ceteris paribus. We find empirical support for the assumptions and the predictions of our model using firm-level data for 28 emerging economies in Europe and Asia; the effect is especially strong in the small and medium enterprises, possibly, because in large firms borrowing is a less essential source of finance. An important policy implication of our findings is that discrimination in the capital market spills over to the labour market, leading to the distortion of occupational choice and inefficiency in allocation of physical and human resources.

Details

Original languageEnglish
Place of PublicationMunich
PublisherCESifo
Publication statusPublished - 27 Feb 2017

Publication series

NameCESifo Working Paper Series
PublisherCESIFO
Volume6353
ISSN (Print)2364-1428

Keywords

  • Occupational choice, discrimination, finance, gender, small and medium enterprises