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Perceived financial barriers and the start-up decision: An econometric analysis of gender differences using GEM data

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  • Stephen, Roper
  • Jonathan M., Scott

Abstract

Although accessing finance is key to the foundation of any business, particular concerns have been expressed about the ability of UK women-owned firms to obtain external finance. In this paper we use an econometric approach to explore the effect of perceptions of financial barriers to start-up on the start-up decision itself. Our analysis is based on the Global Entrepreneurship Monitor (GEM) UK 2004 database. Standardising for a range of individual characteristics, we find that women are around 7.4 per cent more likely to perceive financial barriers to business start-up than men. As perceptions of financial barriers are linked negatively to the start-up decision, stronger perceptions of financial barriers among women are having a disproportionate effect on women’s start-up decisions. However, being female also has an additional negative effect on the start-up decision, not linked to financial barriers. Policy responses, therefore, need to take into account the demand-side with the aim of countering the more negative perceptions of start-up finance among potential women entrepreneurs. Mentoring and confidence building programmes are obvious possibilities. We also find support for the value of university and college-based work experience programmes. [PUBLISHED ABSTRACT]

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23342.

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Date of creation: 2009
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Publication status: Published in International Small Business Journal 27.2(2009): pp. 149-171
Handle: RePEc:pra:mprapa:23342

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Keywords: Finance; entrepreneurship; start-up; SME; gender; women;

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  1. Leung, Danny, 2006. "The male/female earnings gap and female self-employment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(5), pages 759-779, October.
  2. Taylor, Mark P, 1999. "Self-Employment and Windfall Gains in Britain: Evidence From Panel Data," CEPR Discussion Papers 2084, C.E.P.R. Discussion Papers.
  3. Nancy Carter & Candida Brush & Patricia Greene & Elizabeth Gatewood & Myra Hart, 2003. "Women entrepreneurs who break through to equity financing: The influence of human, social and financial capital," Venture Capital, Taylor & Francis Journals, vol. 5(1), pages 1-28, January.
  4. Cressy, Robert, 1996. "Are Business Startups Debt-Rationed?," Economic Journal, Royal Economic Society, vol. 106(438), pages 1253-70, September.
  5. Douglas Holtz-Eakin & David Joulfaian & Harvey S. Rosen, 1994. "Entrepreneurial Decisions and Liquidity Constraints," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 334-347, Summer.
  6. Clain, Suzanne Heller, 2000. "Gender differences in full-time self-employment," Journal of Economics and Business, Elsevier, vol. 52(6), pages 499-513.
  7. Yannis Georgellis & Howard J. Wall, 2004. "Gender differences in self-employment," Working Papers 1999-008, Federal Reserve Bank of St. Louis.
  8. Burke, Andrew E & FitzRoy, Felix R & Nolan, Michael A, 2002. " Self-Employment Wealth and Job Creation: The Roles of Gender, Non-pecuniary Motivation and Entrepreneurial Ability," Small Business Economics, Springer, vol. 19(3), pages 255-70, November.
  9. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
  10. Burke, Andrew E & FitzRoy, Felix R & Nolan, Michael A, 2000. " When Less Is More: Distinguishing between Entrepreneurial Choice and Performance," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(5), pages 565-87, December.
  11. Kon, Y & Storey, D J, 2003. " A Theory of Discouraged Borrowers," Small Business Economics, Springer, vol. 21(1), pages 37-49, August.
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Cited by:
  1. José Ernesto Amoros & Niels Bosma & Jonathan Levie, 2011. "Ten Years of Global Entrepreneurship Monitor: Accomplishments and Prospects," Global Entrepreneurship Monitor Working Paper Series 1105, Global Entrepreneurship Research Association, revised Aug 2011.
  2. Dong Xiang & Andrew C. Worthington & Helen Higgs, 2011. "Firm-level determinants and impacts of finance-seeking behaviour and outcomes for small and medium-sized enterprises (SMEs) in Australia," Discussion Papers in Finance finance:201115, Griffith University, Department of Accounting, Finance and Economics.
  3. In Lee & Matthew Marvel, 2014. "Revisiting the entrepreneur gender–performance relationship: a firm perspective," Small Business Economics, Springer, vol. 42(4), pages 769-786, April.
  4. repec:dgr:uvatin:2009088 is not listed on IDEAS
  5. Tammy Rogers, 2012. "Bank market structure and entrepreneurship," Small Business Economics, Springer, vol. 39(4), pages 909-920, November.
  6. Bosma, Niels, 2013. "The Global Entrepreneurship Monitor (GEM) and Its Impact on Entrepreneurship Research," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 9(2), pages 143-248, February.
  7. Pelger, Ines, 2012. "Male vs. female business owners: Are there differences in investment behavior?," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62016, Verein für Socialpolitik / German Economic Association.
  8. Claudia Álvarez & David Urbano & José Amorós, 2014. "GEM research: achievements and challenges," Small Business Economics, Springer, vol. 42(3), pages 445-465, March.

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