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Financial Access and Entrepreneurship by Gender: Evidence from Rural India

Author

Listed:
  • Sandhya Garg

    (HDFC Chair of Banking and Finance, Institute of Economic Growth)

  • Samarth Gupta

    (Ahmedabad University)

  • Sushanta Mallick

    (Queen Mary University of London)

Abstract

Does improved access to financial sources increase entrepreneurship across gender? We explore this question in the Indian context, by constructing a novel measure of financial access defined as the distance of each unbanked village to the nearest banked centre. Using economic census data at the village level, we find that the proximity of an unbanked village to a banked centre within 5 km increases entrepreneurship in the non-agricultural sector. While exploring the mechanisms, we find that the impact on women is driven by the uptake of institutional credit. The prevailing norms around gender influence the gains from bank proximity as the impact on women enterprises occurs mainly in villages which have liberal social norms. Results hold when we use the number of branches within 5 km as an alternate measure of financial access. Results are robust to several additional tests. Our results show that the lack of nearby banking facilities represents a key constraint for women, and hence, widespread banking outreach can boost female entrepreneurship in rural areas.

Suggested Citation

  • Sandhya Garg & Samarth Gupta & Sushanta Mallick, 2025. "Financial Access and Entrepreneurship by Gender: Evidence from Rural India," Small Business Economics, Springer, vol. 64(2), pages 729-754, February.
    • Handle: RePEc:kap:sbusec:v:64:y:2025:i:2:d:10.1007_s11187-024-00925-z
    DOI: 10.1007/s11187-024-00925-z
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    More about this item

    Keywords

    Credit; Banking; Branch Expansion; Gender; Entrepreneurship; Enterprise; Development;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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