Publication: Why is More Capital not Enough to Grow Female Businesses?
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2009-04
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2012-08-13
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The fourth in impact series follows up on the first impact note, which presented the puzzling finding that the average female-owned microenterprise in Sri Lanka had no gain in profit from grants. This note presents the results of new research designed to understand why.
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“McKenzie, David. 2009. Why is More Capital not Enough to Grow Female Businesses?. Finance & PSD Impact; No. 4. © World Bank. http://hdl.handle.net/10986/10257 License: CC BY 3.0 IGO.”
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The authors randomly gave cash and in-kind grants to male- and female-owned microenterprises in urban Ghana. Their findings cast doubt on the ability of capital alone to stimulate the growth of female microenterprises. First, while the average treatment effects of the in-kind grants are large and positive for both males and females, the gain in profits is almost zero for women with initial profits below the median, suggesting that capital alone is not enough to grow subsistence enterprises owned by women. Second, for women they strongly reject equality of the cash and in-kind grants; only in-kind grants lead to growth in business profits. The results for men also suggest a lower impact of cash, but differences between cash and in-kind grants are less robust. The difference in the effects of cash and in-kind grants is associated more with a lack of self-control than with external pressure. 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