Women-Owned businesses and access to bank credit: Evidence from three surveys since 1987

Monica Zimmerman Treichel and Jonathan A. Scott

Venture Capital, 2005, vol. 8, issue 1, 51-67

Abstract: Women-owned businesses are often thought to face difficulties in applying for and securing bank loans (Schwartz, 1979; Riding and Swift, 1990; Buttner and Rosen, 1992; Fabowale et al ., 1995; Haines et al ., 1999; Coleman, 2000). While there may always be individual instances of difficulties with credit availability that might receive the attention of the media, the more important issue—especially given the increasing contribution of women-owned business to growth in the US economy, is whether women-owned businesses face any systemic, non-economic discrimination in applying for credit. We test three questions related to the success of women-owned businesses in accessing commercial bank financing. First, are women-owned businesses less likely to apply for bank loans than businesses owned by men? Second are women-owned businesses more likely to be turned down in their most recent loan application? And finally, if approved on their most recent loan application, are they more likely to receive a smaller loan? We found gender to be related to the application for bank loans as well as the size of the loans but not to the frequency of turndowns. These findings may be due to an omitted variable that could capture women's concerns about maintaining control over their business.

Date: 2005
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DOI: 10.1080/13691060500453726

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