Gender, Credit, and Firm Outcomes
51 Pages Posted: 23 Oct 2019 Last revised: 2 Jan 2020
Date Written: December 18, 2019
Small and micro enterprises are usually majority owned by entrepreneurs. Using a unique sample of loan applications from such firms, we study the role of owners’ gender in the credit decision of banks and the post-credit decision firm outcomes. We find that, ceteris paribus, female entrepreneurs are more prudent loan applicants, with both the probabilities to apply for credit and of firm default after the loan origination being smaller. However, the relatively more aggressive behavior of male applicants pays off in terms of higher average firm performance after the loan origination.
Keywords: Gender, Loan applications, Bank’s credit decision, Firm profitability and default
JEL Classification: G21, G32, J16
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