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 two explanations for the gendered impact of corruption on borrower discouragement: 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.
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Notes
Rivas (2013, p. 2) predicts that “it may be just a matter of time until women get involved in corrupt activities.”
The correlation between the perception of corruption and obstacles in access to finance is 0.19 and highly significant.
As explained by Kai and Prabhala (2007, p. 45), “Strictly speaking, exclusion restrictions are not necessary in the Heckman selection model because the model is identified by non-linearity.” Hence, we use the same set of variables in our selection equation and regression equation.
Countries in the panel data: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Egypt, Georgia, Kosovo, Lebanon, Mongolia, Montenegro, Morocco, Myanmar, Romania, Russia, Serbia, Turkey, Ukraine, Uzbekistan.
The fixed effects model provides the same conclusions.
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We thank the two anonymous referees for their comments.
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Statnik, JC., Vu, TLG. & Weill, L. Does Corruption Discourage More Female Entrepreneurs from Applying for Credit?. Comp Econ Stud 65, 1–28 (2023). https://doi.org/10.1057/s41294-022-00184-5
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DOI: https://doi.org/10.1057/s41294-022-00184-5