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Gender Bias in Access to Finance, Occupational Choice, and Business Performance

  • Nigar Hashimzade

    ()

    (Department of Economics, University of Reading)

  • Yulia Rodionova

    ()

    (Leicester Business School, De Montfort University)

We analyze, in a model of occupational choice in the labour market and discrimination in the capital market, the relationship between the gender of the owner and of the top manager of a firm, access to finance, and this firm's performance. Occupational choice serves as the link from the capital market to the labour market. The model predicts that if the lenders discriminate against female entrepreneurs, then the conditional average of entrepreneurial skill of female business owners and female top managers is higher than that of their male counterparts. We find empirical evidence in support of our model using firm-level data from the 2009 wave of the Business Environment and Enterprise Performance Survey (BEEPS) for twenty six emerging economies in Eastern Europe and Central Asia. Specifically, we find evidence of discrimination of women in the capital market. Furthermore, we find a positive effect of the female gender of a business owner and of a business top manager on business performance, after controlling for various factors, including possible constraints on access to external finance. The positive effect of a female top manager is mitigated if the firm is owned by a female, suggesting decreasing return to skill, or if it operates in certain industries where female leadership may be of special value, which could be an additional factor in the occupational choice.

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Paper provided by Henley Business School, Reading University in its series Economics & Management Discussion Papers with number em-dp2013-01.

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Length: 24 pages
Date of creation: 08 Apr 2013
Handle: RePEc:rdg:emxxdp:em-dp2013-01
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