The gender gap in access to finance: Evidence from the COVID-19 pandemic

Nirosha Hewa-Wellalage; Sabri Boubaker; Ahmed Imran Hunjra; Peter Verhoeven

doi:10.1016/j.frl.2021.102329

The gender gap in access to finance: Evidence from the COVID-19 pandemic

Financ Res Lett. 2022 May:46:102329. doi: 10.1016/j.frl.2021.102329. Epub 2021 Jul 18.

Authors

Nirosha Hewa-Wellalage¹, Sabri Boubaker^{2

3}, Ahmed Imran Hunjra⁴, Peter Verhoeven⁵

Affiliations

¹ School of Accounting, Finance and Economics, The University of Waikato, Hamilton, New Zealand.
² EM Normandie Business School, Métis Lab, France.
³ International School, Vietnam National University, Hanoi, Vietnam.
⁴ Department of Business Administration, Ghazi University, Dera Ghazi Khan, Pakistan.
⁵ Queensland University of Technology, Brisbane, Australia.

Abstract

Using gender as a theoretical framework, we analyse the dynamics of debt and equity financing during the COVID-19 pandemic for a cross-country sample of 8,921 private firms. We provide evidence of a slight gender bias in debt financing, with creditors favouring female entrepreneurs when dealing with cash flow problems during the COVID-19 pandemic. We find no evidence of gender bias in equity financing. The results are robust after controlling for a larger number of firm-specific characteristics and selection bias. We challenge the assumption of "gender-based discrimination" in the debt market, speculating that in the context of high uncertainty, prototypical forms of femininity may be advantageous as financial institutions seek to hedge their risk by favouring more conservative borrowers.

Keywords: Blinder-Oaxaca decomposition; COVID-19; Debt; Equity; Females; Heckman model.