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
Date Written: August 9, 2013
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: Suggested Citation