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

By S. D. Mel, David J. McKenzie, Christopher Woodruff. Social Science Research Network, 2008

497 citations recorded by the source corpus.

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.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/bdba44fa9cb39b5ddd4fcffee999a5970851cc7c

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Citations in the corpus

Microcredit Under the Microscope: What Have We Learned in the Past Two Decades, and What Do We Need to Know? (2013, background): “This gender gap could be a result of differences in human capital, however; de Mel et al. (2009) find the same difference after controlling for human capital (as well as risk aversion and family wealth).”
Gender Differences in Preferences, Intra-Household Externalities, and Low Demand for Improved Cookstoves (2013, background): “…offered by a product delivery rather than more fungible cash is valuable to women, possibly because they are unable to resist external demands on their income from either their spouse or from others (Anderson & Baland, 2002; Duflo, 2003; de Mel et al., 2009; Brune et al., 2011; Somville, 2011).”
Does female empowerment promote economic development? (2011, background): “The study by de Mel et al. (2009) examines the impact of transfers to micro entrepreneurs in Sri Lanka.”
Microfinance and Gender Empowerment (2012, background): “These constraints explain why women are limited to fewer and less profitable business ventures than men (de Mel et al. 2007, 2008, Emran et al. 2006, Johnson 2004, Johnston and Morduch 2007).6 Unequal interdependence between spouses also explains why women are more dependent on the contribution of…”
Do Interventions Targeted at Micro-Entrepreneurs and Small and Medium-Sized Firms Create Jobs? A Systematic Review of the Evidence for Low and Middle Income Countries (2014, result): “This is consistent with a number of recent studies that find capital or business training to have no effect on female enterprise performance (see for instance de Mel et al. 2009; Fafchamps et al., 2011).”
Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment (2015, background): “Their argument is that different levels of managerial capital, in dealing with financial capital, workers and customers, can explain the heterogeneous effects of capital grants found by for instance de Mel et al. (2008).”
Business Training and Female Enterprise Start-Up, Growth, and Dynamics: Experimental Evidence from Sri Lanka (2012, unknown): “De Mel et al. (2009b) discuss several reasons why these two measures of profits may differ, such as mismatches in the timing of input purchases and sales based on those purchases.”