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An institutional view on access to finance by Tanzanian women-owned enterprises

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  • Vanessa Naegels
  • Neema Mori
  • Bert D’Espallier

Abstract

We investigate the limited use of bank and microfinance loans by Tanzanian female entrepreneurs. Using survey data, we observe that female entrepreneurs mainly use informal sources to finance their businesses. We analyze how “perceptions” of gendered cognitive and normative institutions determine whether a female entrepreneur applies for a formal loan. Following results stand out: first, we find that high collateral requirements, interest rates and personal guarantee requirements make formal loans unattractive. Second, female entrepreneurs only apply when they expect to be successful. Since they “perceive” access to finance to be more problematic for women, female entrepreneurs are discouraged from applying. Third, female entrepreneurs “perceive” they have insufficient access to financial knowledge which again will prevent them from applying. This study contributes to theory by exploring the effect of entrepreneurs’ perceptions of the institutional business environment on financing behavior. Furthermore, we show that the low use of formal loans by female entrepreneurs is primarily demand-driven, which calls into question the effectivity of policy recommendations aiming to increase supply of formal loans.

Suggested Citation

  • Vanessa Naegels & Neema Mori & Bert D’Espallier, 2018. "An institutional view on access to finance by Tanzanian women-owned enterprises," Venture Capital, Taylor & Francis Journals, vol. 20(2), pages 191-210, April.
    • Handle: RePEc:taf:veecee:v:20:y:2018:i:2:p:191-210
    DOI: 10.1080/13691066.2017.1358927
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    Citations

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    Cited by:

    1. Lalarukh Ejaz & Vadim Grinevich & Mine Karatas‐Ozkan, 2023. "Women's informal entrepreneurship through the lens of institutional voids and institutional logics," Gender, Work and Organization, Wiley Blackwell, vol. 30(4), pages 1254-1272, July.
    2. Simba, Amon & Martins Ogundana, Oyedele & Braune, Eric & Dana, Léo–Paul, 2023. "Community financing in entrepreneurship: A focus on women entrepreneurs in the developing world," Journal of Business Research, Elsevier, vol. 163(C).
    3. Neema Mori & Rosallia Mlambiti, 2020. "Determinants of customers’ adoption of mobile banking in Tanzania: Further evidence from a diffusion of innovation theory," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 16(2), pages 203-230.
    4. Welter, Friederike, 2020. "Contexts and gender: Looking back and thinking forward," Working Papers 01/20, Institut für Mittelstandsforschung (IfM) Bonn.
    5. Amon Simba & Mahdi Tajeddin & Léo-Paul Dana & Domingo E. Ribeiro Soriano, 2024. "Deconstructing involuntary financial exclusion: a focus on African SMEs," Small Business Economics, Springer, vol. 62(1), pages 285-305, January.
    6. Jean-Christophe Statnik & Thi-Le-Giang Vu & Laurent Weill, 2023. "Does Corruption Discourage More Female Entrepreneurs from Applying for Credit?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 1-28, March.
    7. Forrester, Juanita Kimiyo & Neville, François, 2021. "An institutional perspective on borrowing discouragement among female-owned enterprises and the role of regional female empowerment," Journal of Business Venturing, Elsevier, vol. 36(6).
    8. Wojdan Omran & Shumaila Yousafzai, 2024. "Epistemic Injustice and Epistemic Resistance: An Intersectional Study of Women’s Entrepreneurship Under Occupation and Patriarchy," Entrepreneurship Theory and Practice, , vol. 48(4), pages 981-1008, July.
    9. Ojong, Nathanael & Simba, Amon & Dana, Leo-Paul, 2021. "Female entrepreneurship in Africa: A review, trends, and future research directions," Journal of Business Research, Elsevier, vol. 132(C), pages 233-248.
    10. Naegels, Vanessa & D’Espallier, Bert & Mori, Neema, 2020. "Perceived problems with collateral: The value of informal networking," International Review of Economics & Finance, Elsevier, vol. 65(C), pages 32-45.

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