Small‐and medium‐sized enterprises (SMEs) heavily rely on banks to finance their projects
as they find it difficult to raise funds via capital markets (Caglayan & Xu, 2016; Cingano,
Manaresi, & Sette, 2016). The conditions faced by SMEs when accessing bank credit are thus
crucial for their existence and development (Degryse, Matthews, & Zhao, 2018; Ferrando,
Popov, & Udell, 2017; Vermoesen, Deloof, & Laveren, 2013). Specific issues concern the impact
that such conditions may have on businesses led by women managers. If we look at the
worldwide data on the gender gap in 2018 (Global Gender Gap Index), significant gender
inequalities, especially in economic participation and political empowerment, emerge even
across European countries. This is not inconsequential, as gender differences may also affect the
bank–firm relationship. Indeed, several studies demonstrate that problems with access to
finance represent a major impediment to women successfully managing their businesses
(see, for example, Marlow & Patton, 2005; World Bank, 2011).
The literature highlights the existence of issues faced by women‐led firms, when accessing
finance, from both the demand and the supply sides of the channel. More specifically, from the
demand side there is a discrete branch of the literature highlighting that women‐led enterprises
tend to refrain from applying for bank credit because they generally feel less confident than
men about their bargaining abilities when dealing with lenders. Hence, they are more likely not
to apply, thus behaving as discouraged borrowers (Bardasi, Sabarwal, & Terrell, 2011; Freel,
Carter, Tagg, & Mason, 2012; Moro, Wisniewski, & Mantovani, 2017; Ongena & Popov, 2016).
Other scholars have also pointed that female‐led businesses may be more likely to refrain from
applying for external funds (e.g. equity capital) as they prefer to finance their projects via
internal sources (Carter, Shaw, Wing, & Wilson, 2007; Coleman & Robb, 2009; Mukhtar, 2006),
thus limiting their growth opportunities, or by relying on networks of friends and family (see,
for example, Alesina, Lotti, & Mistrulli, 2013; Guiso, Sapienza, & Zingales, 2004; Lim & Suh,
2019; Sena, Scott, & Roper, 2012). With regard to the supply side, on the other hand, a typical
issue that female‐led firms may face, compared to male‐led enterprises, is a higher rate of
rejection of their loan applications (see, for example, Cavalluzzo, Cavalluzzo, & Wolken, 2002).
Additionally, women‐led businesses may experience a partial rejection from the lender
(Kremel & Yazdanfar, 2015; Treichel‐Zimmerman & Scott, 2006), or may even face higher price
conditions or be required to provide higher collateral than men in order to obtain credit
(Alesina et al., 2013; Bellucci, Borisov, & Zazzaro, 2010; Mascia & Rossi, 2017; Muravyev,
Talavera, & Schäfer, 2009; Wu & Chua, 2012). It is also worth mentioning that the literature on
this issue is not conclusive and that several studies have not detected signs of gender‐based
discrimination (see, for example, Carter et al., 2007; Moro et al., 2017).
In this paper we build on the above literature to comprehensively investigate whether and in
what way female‐led companies are likely to be discriminated against, compared to men, when
they apply for bank loans, as well as whether and why they avoid applying for bank loans to
finance their projects.
Various reasons motivate our study. First, although the topic appears to be widely debated,
even recent papers (such as Bui, Nguyen, Pham, & Phung, 2019) underscore the need for more
empirical investigations, in response to the numerous qualitative and theoretical works, on the
potential gender gap faced by the SMEs when accessing finance. Second, as recently highlighted
by Rostamkalaei, Nitani, and Riding (2018), most papers still provide mixed evidence on the
existence of gender issues in access to finance, which motivates us to further investigate the
topic. Third, the vast majority of existing studies tend to focus on single issues, rather than
GALLI ET AL.