STEG Working Paper Series Research Theme 2: Labour, Home Production, and Structural Transformation at the Level of the Household, Cross-Cutting Issue 1: Gender

Financial Access and Entrepreneurship by Gender: Evidence from Rural India

WP062 GargGuptaMallick FinancialAccessAndEntrepreneurshipByGender.pdf

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Financial Access And Entrepreneurship By Gender

Does improved access to financial sources improve women’s entrepreneurship? To explore this issue, we construct a novel dataset of village-level financial access defined in terms of distance of each un-banked village to the nearest banked-centre and merge it with village-level enterprise data from rural India. Using a difference-in-differences research design, we find that proximity to a banked-centre within 5km of an un-banked village increases female entrepreneurship in the non-agricultural sector which is driven by an uptake of institutional credit. The male-owned enterprises shift from agricultural to non-agricultural activities. Results are robust to several additional tests. We conclude that ensuring better credit access through widespread banking outreach can boost women entrepreneurship in rural areas.

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