Mitigating the Impact of Household Expropriation on Female Entrepreneurship : Experimental Evidence from Ghana

How do intrahousehold dynamics affect the investment of female entrepreneurs? This paper presents findings from a randomized controlled trial in Ghana that assesses the impacts of four alternative support mechanisms on women-owned businesses: (a) an unconditional grant provided through a mobile money account equivalent to two months of median profits, (b) an unconditional grant disbursed to the female entrepreneurs’ spouses in similar conditions; (c) a grant conditional on participating with their spouses in a training on joint decision-making; and (d) a grant conditional on reaching a savings goal under a dedicated bank account. In line with Fafchamps et al. (2014), the study finds no impacts of the unconditional grants on the business performance of female entrepreneurs. The disbursement to the spouse also has no impact on the sales, profits, or investment of female entrepreneurs. Although there is no evidence that the allocation of resources within households is efficient, the joint decision-making intervention leads to increased household support for the women’s businesses but does not impact business performance. The savings support mechanism leads to a 15 percent increase in sales and a 10 percent increase in profits. These effects are largest among female entrepreneurs who faced high expropriation pressure at baseline. This subgroup obtains a 29 percent increase in sales and a 23 percent increase in profits. The paper tests for alternative mechanisms, including self-control issues, liquidity constraints, and access to savings, but these do not explain the results. The findings substantiate that intrahousehold dynamics matter for women’s investment decisions, and highlight the importance of promoting autonomy in the face of expropriation pressures, for increased growth and investment.