Publication: Capital, Gender, and Microenterprise Growth in Ghana
Date
2011-06
ISSN
Published
2011-06
Author(s)
Abstract
Despite the emphasis placed by
microfinance organizations on lending to female business
owners, evidence from three recent randomized controlled
trials has cast doubt on the ability of capital alone to
grow female-operated microenterprises: in my own previous
experiment in Sri Lanka women given grants saw no increase
in business profits, while the recent randomized trials of
microfinance in the Philippines and India also see very
little in the way of profit increases when women get loans.
One possible interpretation is that female-owned
microenterprises in these countries are already operating at
their efficient level of capital, which might be very low
especially in countries where other labor market options for
women are limited. However, an alternative explanation could
be that the small scale of many female-owned firms is not
efficient, but arises instead from a lack of separation of
business and household accounts, and from inefficiencies in
the way people allocate assets between them. These
inefficiencies might arise from self-control problems,
leading owners to not undertake profitable investments, or
from external pressure to share with others.
Citation
“Fafchamps, Marcel; McKenzie, David; Quinn, Simon; Woodruff, Christopher. 2011. Capital, Gender, and Microenterprise Growth in Ghana. Finance & PSD Impact; No. 14. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/ce54c0a7-ee0c-505a-a920-2dd3f930a15a License: CC BY 3.0 IGO.”