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What restricts credit to women enterprises? Evidence from India’s informal sector

What restricts credit to women enterprises? Evidence from India’s informal sector The purpose of this paper is to determine the factors which affect the financial access of the female-owned informal enterprises (FOIEs) in India. There has been a dearth of studies particularly targeting determinants of credit access by the women-owned informal enterprises. Demand side factors affecting financial access have been studied. The study of major factors affecting access to credit by unorganized women enterprises will be useful for policy making perspectives.Design/methodology/approachThe study uses nationalized micro data set on the non-agricultural informal enterprises and probit estimation has been used to identify the factors which affect the probabilities of access to credit for the FOIEs.FindingsThe study highlights what facilitates and hinders the financial access for the FOIEs particularly in India. These enterprises in rural areas have better chances to avail credit from formal sources. Firm size, measured by policy-making size of employment and gross profit, involvement in diversified activities, maintenance of accounting record, has positive and significant impact on access to formal credit. The younger firms and the firms operating in the southern states of the country have higher probabilities to avail credit from institutional sources.Originality/valueThe study used the latest data set available on Indian informal enterprises, thus provides important insights about the status of financing of enterprises in India. This study highlights the regional variations and gender disparities that are prevalent in the Indian economy. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Social Economics Emerald Publishing

What restricts credit to women enterprises? Evidence from India’s informal sector

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0306-8293
DOI
10.1108/ijse-08-2018-0422
Publisher site
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Abstract

The purpose of this paper is to determine the factors which affect the financial access of the female-owned informal enterprises (FOIEs) in India. There has been a dearth of studies particularly targeting determinants of credit access by the women-owned informal enterprises. Demand side factors affecting financial access have been studied. The study of major factors affecting access to credit by unorganized women enterprises will be useful for policy making perspectives.Design/methodology/approachThe study uses nationalized micro data set on the non-agricultural informal enterprises and probit estimation has been used to identify the factors which affect the probabilities of access to credit for the FOIEs.FindingsThe study highlights what facilitates and hinders the financial access for the FOIEs particularly in India. These enterprises in rural areas have better chances to avail credit from formal sources. Firm size, measured by policy-making size of employment and gross profit, involvement in diversified activities, maintenance of accounting record, has positive and significant impact on access to formal credit. The younger firms and the firms operating in the southern states of the country have higher probabilities to avail credit from institutional sources.Originality/valueThe study used the latest data set available on Indian informal enterprises, thus provides important insights about the status of financing of enterprises in India. This study highlights the regional variations and gender disparities that are prevalent in the Indian economy.

Journal

International Journal of Social Economics – Emerald Publishing

Published: Aug 14, 2019

Keywords: Credit access; Informal enterprises; Financial access; women entrepreneurs

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