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

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  • Bertrand, Jérémie
  • Perrin, Caroline

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.

Suggested Citation

  • Bertrand, Jérémie & Perrin, Caroline, 2022. "Girls Just Wanna Have Funds? The effect of women-friendly legislation on female-led firms’ access to credit," International Review of Law and Economics, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:irlaec:v:72:y:2022:i:c:s0144818822000576
    DOI: 10.1016/j.irle.2022.106101
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    More about this item

    Keywords

    Banking; Gender; Access to credit; Borrower discouragement;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • K38 - Law and Economics - - Other Substantive Areas of Law - - - Human Rights Law; Gender Law; Animal Rights Law

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