Girls Just Wanna Have Funds? The effect of women-friendly legislation on female-led firms’ access to credit

Jérémie Bertrand and Caroline Perrin
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Jérémie Bertrand: LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique
Caroline Perrin: EM Strasbourg - École de Management de Strasbourg = EM Strasbourg Business School

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Abstract: Does a women-friendly legal environment help women overcome discrimination in credit markets? By examining antidiscrimination laws and their implications for women-led businesses' access to credit in 124 countries, the current study differentiates an effect on discouragement (i.e., not asking for credit when they need it, demand side) and an effect on the probability that they obtain credit (supply side). Legal protections are associated with lower discouragement for women-led firms, but they do not support the attainment of more credit. We demonstrate that enforcement efforts dramatically amplify the effect of women-friendly laws on self-restrictions in terms of credit and enable women-led firms to access more credit. Women are sensitive to the legal environment in which they operate, while banks need strong incentives to change their behavior. This effect is notable with regard to rational discouragement and prevails among smaller firms and in high-income countries. These results are robust to several tests.

Keywords: Banking; Gender; Access to credit; Borrower discouragement (search for similar items in EconPapers)
Date: 2022-12
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Citations: View citations in EconPapers (2)

Published in International Review of Law and Economics, 2022, 72, pp.106101. ⟨10.1016/j.irle.2022.106101⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03976695

DOI: 10.1016/j.irle.2022.106101

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