Entrepreneurship and gender: Differential access to finance and divergent business value

Abstract

In this paper we examine differences in access to finance and business value by gender. Using recent data from the German Socio-Economic Panel, instrumented linear probability models show that an increase in personal wealth substantially affects the probability of being a business owner only among females. This is indicative of differential access to finance by gender. Among business owners, fixed-effects regressions reveal that obtaining a bank loan increases mean total business value more for females than for males. Thus, possession of a bank loan appears to be a critical factor in explaining the business value gender gap.