Why Are Female Small Business Owners in the United States Less Likely to Apply for Bank Loans than Their Male Counterparts?

Journal of Small Business & Entrepreneurship Vol. 27, Iss. 2, 2014

Posted: 20 Jan 2014 Last revised: 21 Mar 2015

See all articles by Naranchimeg Mijid

Naranchimeg Mijid

Connecticut Center for Innovative Entrepreneurs

Date Written: August 9, 2013

Abstract

Women business owners are more discouraged than men to apply for a bank loan because of fear of rejection. Using the three Surveys of Small Business Finances, this study examines the reasons for discouragement and previous loan experiences. The study estimates the probability of loan denial using the maximum likelihood approach and finds the evidence of bank discrimination against female-owned businesses which feeds the reason for discouragement. The study suggests further investigation on this feedback effect of loan denial on business owners’ decision making process.

Keywords: discouraged borrowers, women entrepreneurs, small business finances, discrimination in lending

JEL Classification: G21, L26, J71

Suggested Citation

Mijid, Naranchimeg, Why Are Female Small Business Owners in the United States Less Likely to Apply for Bank Loans than Their Male Counterparts? (August 9, 2013). Journal of Small Business & Entrepreneurship Vol. 27, Iss. 2, 2014, Available at SSRN: https://ssrn.com/abstract=2381302

Naranchimeg Mijid (Contact Author)

Connecticut Center for Innovative Entrepreneurs ( email )

185 Main St. Suite 403
New Britain, CT 06051
United States
860-328-2954 (Phone)

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