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Female entrepreneurship, financial frictions and capital misallocation in the US

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  • Morazzoni, Marta
  • Sy, Andrea

Abstract

We document and quantify the effect of a gender gap in credit access on both entrepreneurship and input misallocation in the US. Female entrepreneurs are found to be more likely to face a rejection on their loan applications and to have a higher average product of capital, a sign of gender-driven capital misallocation that decreases in female-led firms’ access to finance. These results are not driven by differences in observable individual or businesses characteristics. Calibrating a heterogeneous agents model of entrepreneurship to the US economy, we show that the observed gap in credit access explains the bulk of the gender differences in capital allocation across firms. Eliminating such credit imbalance is estimated to potentially increase output by 4%, and to reduce capital misallocation by 12%.

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  • Morazzoni, Marta & Sy, Andrea, 2022. "Female entrepreneurship, financial frictions and capital misallocation in the US," Journal of Monetary Economics, Elsevier, vol. 129(C), pages 93-118.
    • Handle: RePEc:eee:moneco:v:129:y:2022:i:c:p:93-118
    DOI: 10.1016/j.jmoneco.2022.03.007
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    4. Klenow, Peter J., 2022. "Comment on “Female entrepreneurship, financial frictions and capital misallocation in the US”," Journal of Monetary Economics, Elsevier, vol. 129(C), pages 119-122.
    5. Chiplunkar, Gaurav & Goldberg, Pinelopi Koujianou, 2024. "Aggregate Implications of Barriers to Female Entrepreneurship," IZA Discussion Papers 17281, Institute of Labor Economics (IZA).
    6. Goraya, Sampreet Singh, 2023. "How does caste affect entrepreneurship? birth versus worth," Journal of Monetary Economics, Elsevier, vol. 135(C), pages 116-133.
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    8. Elizaveta V. Martyanova & Andrey V. Polbin, 2023. "General equilibrium model with the entrepreneurial sector for the Russian economy," Russian Journal of Economics, ARPHA Platform, vol. 9(2), pages 109-133, July.

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    More about this item

    Keywords

    Entrepreneurship; Misallocation; Aggregate productivity; Gender gaps; Financial constraints;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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