Regional Female Empowerment
Research Paper Title:
“An institutional perspective on borrowing discouragement among female-owned enterprises and the role of regional female empowerment”
Authors:
Juanita Kimiyo Forrester (Mercer University)
François Neville (McMaster University)
Background:
The researchers examine the occurrence of borrowing discouragement for female-owned enterprises; that is, the likelihood that they will not seek business financing because they believe their requests will be rejected. However, the researchers also consider that gender-based borrowing discouragement will be influenced by female empowerment levels in three distinct indicators of female empowerment that vary by geographic region within a society: social and economic autonomy, reproductive rights, and political participation. The findings indeed suggest that while female-owned enterprises are more likely to exhibit borrowing discouragement than their male-owned counterparts, this effect varies regionally based on female empowerment.
Methodology:
Sample: Data on small business financing from the 2003 Survey of Small Business Financing (SSBF), administered by the US Federal Reserve; data on female empowerment indicators from Status of Women in the States, a project of the Institute for Women's Policy Research.
Sample Size: 4090 small businesses
Analytical Approach: Logistic regression
Hypothesis:
1. Female-owned enterprises are more likely to exhibit discouragement towards applying for loans from financial institutions than male-owned enterprises. (Supported)
2. Regional levels of social and economic autonomy for women will moderate the positive relationship between female ownership status and borrowing discouragement such that the relationship will become weaker (less positive) as regional levels of social and economic autonomy for women increase. (Supported)
3. Regional levels of reproductive rights for women will moderate the positive relationship between female ownership status and borrowing discouragement such that the relationship will become weaker (less positive) as regional levels of reproductive rights for women increase. (Supported)
4. Regional levels of political participation for women will moderate the positive relationship between female ownership status and borrowing discouragement such that the relationship will become weaker (less positive) as regional levels of political participation for women increase. (Supported)
Results:
1. Female-owned enterprises are more commonly discouraged than their male-owned counterparts. Further, female-owned are approximately 44% more likely to report borrowing discouragement than their male-owned counterparts.
2. Regional levels of social and economic autonomy for women dampen the gender-based effect of discouragement.
3. Regional levels of reproductive rights for women dampen the gender-based effect of discouragement.
4. Regional levels of political participation for women dampen the gender-based effect of discoruagement.
5. Results hold when considering that gender might operate indirectly through experience, firm size (i.e., total assets), and credit risk.
Conclusion:
The authors were able to expand the understanding of contextual origins of gender-based borrowing discouragement, while demonstrating that borrowing discouragement is influenced by distinct indicators of female empowerment that vary by geographic region: social and economic autonomy, reproductive rights, and political participation. The researchers believe that their findings offer some evidence that gendered beliefs embedded in the business logic that governs the field of entrepreneurship contribute to borrowing discouragement among female-owned enterprises. However, the authors also find that this logic is not automatically reproduced equally across all regions within a given society.