IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v78y2023icp358-372.html
   My bibliography  Save this article

Gender discrimination, social networks and access to informal finance of Vietnamese small and medium enterprises

Author

Listed:
  • Bach, Thang Ngoc
  • Le, Thanh
  • Nguyen, Thang Xuan
  • Hoang, Khanh

Abstract

The issue of gender discrimination in the informal credit market is under-investigated given that existing studies largely consider formal bank loans. Using a rich dataset on access to informal loans and loan terms of Vietnamese privately-owned manufacturing small and medium enterprises over 2005-2015, this paper finds that female-run firms have a lower propensity to borrow and incur a higher cost of borrowing from informal sources than male-run counterparts. The empirical evidence on gender discrimination is robust to the control of different firm characteristics, firm-specific unobserved heterogeneity, and selection bias. With the potential to mitigate gender discrimination, extended social networks are found to work in favor of female-run firms.

Suggested Citation

  • Bach, Thang Ngoc & Le, Thanh & Nguyen, Thang Xuan & Hoang, Khanh, 2023. "Gender discrimination, social networks and access to informal finance of Vietnamese small and medium enterprises," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 358-372.
    • Handle: RePEc:eee:ecanpo:v:78:y:2023:i:c:p:358-372
    DOI: 10.1016/j.eap.2023.03.017
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592623000371
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2023.03.017?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 1-32, July.
    2. John McMillan & Christopher Woodruff, 1999. "Interfirm Relationships and Informal Credit in Vietnam," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1285-1320.
    3. Catherine C. Eckel & Philip J. Grossman, 2002. "Sex Differences and Statistical Stereotyping in Attitudes Toward Financial Risk," Monash Economics Working Papers archive-03, Monash University, Department of Economics.
    4. Casey, Eddie & O'Toole, Conor M., 2014. "Bank lending constraints, trade credit and alternative financing during the financial crisis: Evidence from European SMEs," Journal of Corporate Finance, Elsevier, vol. 27(C), pages 173-193.
    5. Moro, Andrea & Wisniewski, Tomasz Piotr & Mantovani, Guido Massimiliano, 2017. "Does a manager's gender matter when accessing credit? Evidence from European data," Journal of Banking & Finance, Elsevier, vol. 80(C), pages 119-134.
    6. J. Michelle Brock & Ralph De Haas, 2023. "Discriminatory Lending: Evidence from Bankers in the Lab," American Economic Journal: Applied Economics, American Economic Association, vol. 15(2), pages 31-68, April.
    7. Allen, Franklin & Qian, Meijun & Xie, Jing, 2019. "Understanding informal financing," Journal of Financial Intermediation, Elsevier, vol. 39(C), pages 19-33.
    8. Okten, Cagla & Osili, Una Okonkwo, 2004. "Social Networks and Credit Access in Indonesia," World Development, Elsevier, vol. 32(7), pages 1225-1246, July.
    9. Elizabeth Asiedu & James A. Freeman & Akwasi Nti-Addae, 2012. "Access to Credit by Small Businesses: How Relevant Are Race, Ethnicity, and Gender?," American Economic Review, American Economic Association, vol. 102(3), pages 532-537, May.
    10. David G. Blanchflower & Phillip B. Levine & David J. Zimmerman, 2003. "Discrimination in the Small-Business Credit Market," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 930-943, November.
    11. Alberto F. Alesina & Francesca Lotti & Paolo Emilio Mistrulli, 2013. "Do Women Pay More For Credit? Evidence From Italy," Journal of the European Economic Association, European Economic Association, vol. 11, pages 45-66, January.
    12. Thang Bach & Charles Harvie & Thanh Le, 2021. "How credit constraints affect small and medium enterprises' strategic employment decisions and employees' labour outcomes: Evidence from Vietnam1," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 29(2), pages 319-341, April.
    13. Thang Bach & Thanh Le & Yen Bui, 2021. "Informal Short-term Borrowings and Small and Medium Enterprises’ Performance in a Credit Crunch: Evidence from Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 57(8), pages 1321-1335, August.
    14. An, Jiafu, 2020. "Is there an employee-based gender gap in informal financial markets? International evidence," Journal of Corporate Finance, Elsevier, vol. 65(C).
    15. Shijun Chai & Yang Chen & Bihong Huang & Dezhu Ye, 2019. "Social networks and informal financial inclusion in China," Asia Pacific Journal of Management, Springer, vol. 36(2), pages 529-563, June.
    16. Wellalage, Nirosha Hewa & Locke, Stuart, 2020. "Formal credit and innovation: Is there a uniform relationship across types of innovation?," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 1-15.
    17. Saul Estrin & Tomasz Mickiewicz & Ute Stephan, 2013. "Entrepreneurship, Social Capital, and Institutions: Social and Commercial Entrepreneurship across Nations," Entrepreneurship Theory and Practice, , vol. 37(3), pages 479-504, May.
    18. D'Espallier, Bert & Guérin, Isabelle & Mersland, Roy, 2011. "Women and Repayment in Microfinance: A Global Analysis," World Development, Elsevier, vol. 39(5), pages 758-772, May.
    19. Pham, Tho & Talavera, Oleksandr, 2018. "Discrimination, Social Capital, and Financial Constraints: The Case of Viet Nam," World Development, Elsevier, vol. 102(C), pages 228-242.
    20. Huis, Marloes & Lensink, Robert & Vu, Nhung & Hansen, Nina, 2019. "Impacts of the Gender and Entrepreneurship Together Ahead (GET Ahead) training on empowerment of female microfinance borrowers in Northern Vietnam," World Development, Elsevier, vol. 120(C), pages 46-61.
    21. Agier, Isabelle & Szafarz, Ariane, 2013. "Microfinance and Gender: Is There a Glass Ceiling on Loan Size?," World Development, Elsevier, vol. 42(C), pages 165-181.
    22. Fafchamps, Marcel, 2000. "Ethnicity and credit in African manufacturing," Journal of Development Economics, Elsevier, vol. 61(1), pages 205-235, February.
    23. Lindsey N. Godwin & Christopher E. Stevens & Nurete L. Brenner, 2006. "Forced to Play by the Rules? Theorizing how Mixed–Sex Founding Teams Benefit Women Entrepreneurs in Male–Dominated Contexts," Entrepreneurship Theory and Practice, , vol. 30(5), pages 623-642, September.
    24. Kenta Goto, 2013. "Social networks, informal trade credit and its effects on business growth: evidence from the local garment trade in Vietnam," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 18(3), pages 382-395.
    25. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    26. Hoang, Tuyen Thanh & Nguyen, Cuong Viet & Van Tran, Hoa Thi, 2019. "Are female CEOs more risk averse than male counterparts? Evidence from Vietnam," Economic Analysis and Policy, Elsevier, vol. 63(C), pages 57-74.
    27. Elizabeth Asiedu & Isaac Kalonda-Kanyama & Leonce Ndikumana & Akwasi Nti-Addae, 2013. "Access to Credit by Firms in Sub-Saharan Africa: How Relevant Is Gender?," American Economic Review, American Economic Association, vol. 103(3), pages 293-297, May.
    28. Mascia, Danilo V. & Rossi, Stefania P.S., 2017. "Is there a gender effect on the cost of bank financing?," Journal of Financial Stability, Elsevier, vol. 31(C), pages 136-153.
    29. Thang Ngoc Bach, 2019. "State owned enterprises and capital misallocation in Vietnam," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 24(3), pages 430-451, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kuhn, Florian & Chanci, Luis, 2024. "Racial disparities in labor outcomes: The effects of hiring discrimination over the business cycle," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 801-817.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pham, Tho & Talavera, Oleksandr, 2018. "Discrimination, Social Capital, and Financial Constraints: The Case of Viet Nam," World Development, Elsevier, vol. 102(C), pages 228-242.
    2. Chen, Xiao & Huang, Bihong & Ye, Dezhu, 2020. "Gender gap in peer-to-peer lending: Evidence from China," Journal of Banking & Finance, Elsevier, vol. 112(C).
    3. Vojtech Bartos & Silvia Castro & Kristina Czura & Timm Opitz, 2023. "Gendered Access to Finance: The Role of Team Formation, Idea Quality, and Implementation Constraints in Business Evaluations," Rationality and Competition Discussion Paper Series 473, CRC TRR 190 Rationality and Competition.
    4. Chen, Xiao & Huang, Bihong & Ye, Dezhu, 2019. "The Gender Gap in Peer-to-Peer Lending: Evidence from the People’s Republic of China," ADBI Working Papers 977, Asian Development Bank Institute.
    5. Dongyu Chen & Xiaolin Li & Fujun Lai, 2017. "Gender discrimination in online peer-to-peer credit lending: evidence from a lending platform in China," Electronic Commerce Research, Springer, vol. 17(4), pages 553-583, December.
    6. Reynal-Querol, Marta & García-Montalvo, José, 2020. "Gender And Credit Risk: A View From The Loan Officer'S Desk," CEPR Discussion Papers 14500, C.E.P.R. Discussion Papers.
    7. Pham, Tho & Talavera, Oleksandr, 2018. "Discrimination, Social Capital, and Financial Constraints: The Case of Viet Nam," World Development, Elsevier, vol. 102(C), pages 228-242.
    8. Radeef Chundakkadan & Subash Sasidharan, 2022. "Gender gap and access to finance: A cross‐country analysis," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 180-207, February.
    9. Mascia, Danilo V. & Rossi, Stefania P.S., 2017. "Is there a gender effect on the cost of bank financing?," Journal of Financial Stability, Elsevier, vol. 31(C), pages 136-153.
    10. de Andrés, Pablo & Gimeno, Ricardo & Mateos de Cabo, Ruth, 2021. "The gender gap in bank credit access," Journal of Corporate Finance, Elsevier, vol. 71(C).
    11. Claudia Piras & Andrea Filippo Presbitero & Roberta Rabellotti, 2013. "Definitions Matter: Measuring Gender Gaps in Firms' Access to Credit," Mo.Fi.R. Working Papers 90, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    12. Amina Ika Micah, 2022. "Three essays on access to credit and financial shock in Nigeria," Economics PhD Theses 0422, Department of Economics, University of Sussex Business School.
    13. J. Michelle Brock & Ralph De Haas, 2023. "Discriminatory Lending: Evidence from Bankers in the Lab," American Economic Journal: Applied Economics, American Economic Association, vol. 15(2), pages 31-68, April.
    14. Ferdinando Giglio, 2020. "Access to Credit and Women Entrepreneurs: A Systematic Literature Review," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 312-335.
    15. Tran, Viet T. & Nguyen, Trung Thanh & Tran, Nguyet T.M., 2019. "Gender difference in access to local finance and firm performance: Evidence from a panel survey in Vietnam," Economic Analysis and Policy, Elsevier, vol. 63(C), pages 150-164.
    16. Anastasia Cozarenco & Ariane Szafarz, 2018. "Gender Biases in Bank Lending: Lessons from Microcredit in France," Journal of Business Ethics, Springer, vol. 147(3), pages 631-650, February.
    17. Isabelle Agier & Ariane Szafarz, 2013. "Subjectivity in credit allocation to micro-entrepreneurs: evidence from Brazil," Small Business Economics, Springer, vol. 41(1), pages 263-275, June.
    18. José García-Montalvo & Marta Reynal-Querol, 2019. "Gender and Credit Risk: A View From the Loan Officer’s Desk," Working Papers 1076, Barcelona School of Economics.
    19. Naegels, Vanessa & Mori, Neema & D'Espallier, Bert, 2022. "The process of female borrower discouragement," Emerging Markets Review, Elsevier, vol. 50(C).
    20. José Garcia Montalvo & Marta Reynal-Querol, 2019. "Gender and credit risk: a view from the loan officer's desk," Economics Working Papers 1644, Department of Economics and Business, Universitat Pompeu Fabra.

    More about this item

    Keywords

    Gender discrimination; Social networks; Financial accessibility; Cost of funding; SMEs;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:78:y:2023:i:c:p:358-372. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.