Does Corruption Discourage More Female Entrepreneurs from Applying for Credit?
35 Pages Posted: 18 Feb 2021
Date Written: December 31, 2020
Abstract
There is evidence of a gender gap in access to finance. In this paper, we test the hypothesis that corruption discourages more female than male entrepreneurs from applying for credit. We use data on access to credit and corruption at the firm level for a large dataset of firms from 68 countries worldwide. We demonstrate that female entrepreneurs are more discouraged by corruption to ask for credit than male borrowers. We find evidence for three explanations for the gendered impact of corruption on borrower discouragement: women-managed firms suffer more from corruption than men-managed firms, women have less experience in management than men and as such can have less experience to deal with corruption, and gender inequality in society enhances the discouragement of female borrowers. Thus, our findings provide evidence that corruption enhances the gender gap in access to finance, enhancing gender inequality in participation in economic activity.
Keywords: gender, access to credit, borrower discouragement, corruption.
JEL Classification: D73, G21, J16
Suggested Citation: Suggested Citation