Inherited Gender Bias and Female-Owned Firms’ Access to Credit

Abstract

We identify the causal effect of gender bias on access to finance. We extract an exogenous measure of gender bias from survey responses by descendants of US immigrants on questions about the role of women in society. We then investigate a detailed dataset on 6,000 small business firms from 17 countries and find that in countries with higher gender bias, female-owned firms are more frequently discouraged from applying for bank credit and reliant on informal finance. These results are not driven by credit risk differences between female- and male-owned firms in high-gender bias countries or by any idiosyncrasies in the set of countries in our sample.