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Small Business Economics

Erschienen in:

01.05.2012

Gender, borrowing patterns and self-employment: some evidence for England

verfasst von: Vania Sena, Jonathan Scott, Stephen Roper

Erschienen in: Small Business Economics | Ausgabe 4/2012

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Abstract

The purpose of this paper is twofold. First, we try to identify whether women have different borrowing patterns from men when trying to get into self-employment along with the factors that explain these different propensities. Second, we try to quantify the impact of these differences in borrowing propensity on women’s willingness to become self-employed. The empirical analysis is carried out on a sample of individuals drawn from the English Household Survey of Entrepreneurship, 2003. Our results show that (1) women are less likely than men to seek external finance and that (2) gender differences in access to finance are affecting adversely the transition into self-employment.

Vorheriger Artikel Seasoned equity offerings by small and medium-sized enterprises

Nächster Artikel Explaining loan rate differentials between small and large companies: evidence from Switzerland

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The dominant sources of funding used by women-owned businesses are earnings from the company, savings, home equity loans, credit cards and family loans (Belcourt et al. 1991). When they do secure debt funding, it is most often from savings and loans from family members (Schwartz 1979). Also women-owned companies are significantly less likely to use bank loans than those of men to finance their business (Coleman and Carsky 1996).

In England a wide consultation exercise by the Small Business Support (SBS) unit (2003) led to the launch of a “Strategic Framework for Women’s Enterprise” (Small Business Service 2003), in collaboration with the devolved administrations, various government departments and with Prowess, a national UK network to promote women's enterprise. The strategic framework has identified the lack of access to finance as one of the main barriers to women's involvement in the entrepreneurial activity (Small Business Service 2003, p. 8).

In fact, researchers have typically studied entrepreneurs fairly far along in the business formation process, despite the fact that questions about entrepreneurial choice and access to finance refer to behaviours and processes that occur very early in the process.

In a world where lenders cannot observe the outcome of a project or the capability of a potential borrower to run an entrepreneurial project successfully, they are unable to sort good loan applications from bad ones. In this type of environment, increasing a loan’s price (i.e. the interest rate) will not price out bad applicants (as on the contrary these will now have the incentive to apply for loans as they are less likely to repay the loan and then pay the higher interest rates) and therefore the average quality of the pool of applicants will decrease (Stiglitz and Weiss 1981).

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Notice that these dummies should allow to control for the different self-employment occupational paths and their different financial requirements.

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Titel: Gender, borrowing patterns and self-employment: some evidence for England
verfasst von: Vania Sena
Jonathan Scott
Stephen Roper
Publikationsdatum: 01.05.2012
Verlag: Springer US
Erschienen in: Small Business Economics / Ausgabe 4/2012
Print ISSN: 0921-898X
Elektronische ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-010-9272-9

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