Gender gap and access to finance: A cross‐country analysis

Using a rich firm‐level data set pertaining to 80 countries, this paper investigates the relationship between institutional gender equality and financial constraints on female‐led firms. We employ a broad index of gender inequality as well as alternate measures in terms of economic, educational, and political inequality. We observe that institutional gender equality benefits female entrepreneurs’ access to finance. In addition, in a gender‐equal environment, we observe that female‐owned and female‐managed firms are less likely to be discouraged from applying for formal finance. We find these effects are more pronounced in the case of small and medium enterprises (SMEs) and young firms. Further, our results suggest that economic, educational, and political gender equality is vital to improving women enterprises’ access to external finance.