Blended Finance and Female Entrepreneurship

We study the real and allocative consequences of relaxing gender-specific credit constraints by analyzing a blended finance program that expanded bank lending to female entrepreneurs in Turkey. Merging credit registry data, firm-level tax records, and matched employer-employee data, we find that participating banks increase their share of credit to women by over 18%, a sustained effect driven by lending to existing, poached, and first-time female borrowers. Beneficiary firms increase investment, employment, sales, and profits, diversify their business networks, and exit less. While treated banks also expand lending to male entrepreneurs, this increase is smaller and disproportionately directed toward higher-productivity firms, suggesting reallocation rather than crowding out. District-level effects on female entrepreneurship are absent, reflecting the program's modest scale. Our results provide well-identified evidence for mechanisms central to quantitative models of female entrepreneurship and capital misallocation.