Gender and bank lending after the global financial crisis: are women entrepreneurs safer bets?
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Gender and bank lending after the global financial crisis: are women entrepreneurs safer bets? Marc Cowling
&
Susan Marlow & Weixi Liu
Accepted: 20 March 2019 # Springer Science+Business Media, LLC, part of Springer Nature 2019
Abstract Using gender as a theoretical framework, we analyse the dynamics of bank lending to small- and medium-sized enterprises (SME) in the aftermath of the 2008 global financial crisis. Using six waves of the SME Finance Monitor survey, we apply a formal Oaxaca–Blinder decomposition to test whether gender impacts upon the supply and demand for debt finance by women. Reflecting established evidence, we found women had a lower demand for bank loans; contradicting accepted wisdom however, we found that women who did apply were more likely to be successful. We argue that feminised risk aversion might inform more conservative applications during a period of financial uncertainty which may be beneficial for women in terms of gaining loans. However, we also uncover more subtle evidence suggesting that bank decisions may differ for women who may be unfairly treated in terms of collateral but regarded more positively when holding large cash balances. M. Cowling (*) University of Derby, College of Business, Law, and Social Science, Kedleston Road, Derby DE22 1GB, UK e-mail: [email protected] S. Marlow Nottingham University Business School, Jubilee Campus, Nottingham NG8 1BB, UK e-mail: [email protected] W. Liu University of Bath School of Management, Bath BA2 7AY, UK e-mail: [email protected]
Keywords Gender . Finance . Bank lending . Risk . Discrimination JEL classification G32 . J16 . L26
1 Introduction Since the 1990s, there has been a growing interest in the influence of gender upon women’s entrepreneurial activities (Henry et al. 2016; Marlow and Martinez-Dy 2018). A dedicated theme emerging from this critique has been access to business funding to support entrepreneurial endeavours (Marlow and Patton 2005; Carter et al. 2007; Coleman and Robb 2015). Given the market vulnerability of small and medium-sized enterprises (SMEs), attaining access to appropriate forms of finance can be challenging (Roberts 2015). A well-rehearsed debate suggests women business owners are further disadvantaged by discriminatory gendered ascriptions which potentially affect both the supply and demand of business funding; this in turn impacts upon venture sustainability and growth (Marlow and Patton 2005; Coleman and Robb 2009). We add a new dimension to this debate by critically analysing the impact of the 2008 global finance crisis (GFC) upon bank lending practices to women business owners in the UK. After 2008, the GFC had a far-reaching impact upon the small firm finance landscape (Cowling et al. 2012; Vermoesen et al. 2013). Such effects have persisted beyond the GFC into a subsequent world recession
M. Cowling et al.
(Jones-Evans 2015; Lee et al. 2015). This period of turbulence was associated with ‘extremely tight credit conditions’ (Piacentini 2013: 24) for small firm borrowing through
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