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Gender and the availability of credit to privately held firms: evidence from the surveys of small business finances

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  • Rebel A. Cole
  • Hamid Mehran

Abstract

This study analyzes differences by gender in the ownership of privately held U.S. firms and examines the role of gender in the availability of credit. Using data from the nationally representative Surveys of Small Business Finances, which span a period of sixteen years, we document a series of empirical regularities in male- and female-owned firms. Looking at the differences by gender, we find that female-owned firms are 1) significantly smaller, as measured by sales, assets, and employment; 2) younger, as measured by age of the firm; 3) more likely to be organized as proprietorships and less as corporations; 4) more likely to be in retail trade and business services and less likely to be in construction, secondary manufacturing, and wholesale trade; and 5) inclined to have fewer and shorter banking relationships. Moreover, female owners are significantly younger, less experienced, and not as well educated. We also find strong univariate evidence of differences in the availability of credit to male- and female-owned firms. More specifically, female-owned firms are significantly more likely to be credit-constrained because they are more likely to be discouraged from applying for credit, though not more likely to be denied credit when they do apply. However, these differences are rendered insignificant in a multivariate setting, where we control for other firm and owner characteristics.

Suggested Citation

  • Rebel A. Cole & Hamid Mehran, 2009. "Gender and the availability of credit to privately held firms: evidence from the surveys of small business finances," Staff Reports 383, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednsr:383
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    Citations

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    Cited by:

    1. S. Brana, 2013. "Microcredit: an answer to the gender problem in funding?," Small Business Economics, Springer, vol. 40(1), pages 87-100, January.
    2. Bellucci, Andrea & Borisov, Alexander & Zazzaro, Alberto, 2010. "Does gender matter in bank-firm relationships? Evidence from small business lending," Journal of Banking & Finance, Elsevier, vol. 34(12), pages 2968-2984, December.
    3. 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.
    4. Berezinets, Irina & Ilina, Yulia & Muravyev, Alexander, 2011. "CEO and Board Characteristics as Determinants of Private Benefits of Control: Evidence from the Russian Stock Exchange," IZA Discussion Papers 6256, Institute for the Study of Labor (IZA).
    5. Cole, Rebel, 2011. "How do firms choose legal form of organization?," MPRA Paper 32591, University Library of Munich, Germany.

    More about this item

    Keywords

    Women-owned business enterprises - Finance ; Corporations - Finance ; Commercial credit;

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