Microenterprise Lending to Female Entrepreneurs: Sacrificing Economic Growth for Poverty Alleviation?

This paper compares the performance of female and male entrepreneurs in a micro enterprise credit program in Guatemala. The authors state that previous research has suggested that targeting credit at female borrowers increases household welfare, but it is the male entrepreneurs that may more aggressively expand enterprises when given access to credit.

The paper develops a model that seeks to clarify why gender differences could be expected in economic responses to credit access:

• The studies show that gender differences in economic responses are surprisingly small;
• However, during childbearing years, and years in which they have to allocate time to caring for children, female entrepreneurs exhibit significantly lower rates of employment generation than male entrepreneurs.

The authors summarize the results of the Guatemalan study as follows:

• Young male entrepreneurs are more aggressive in generating employment than their older counterparts;
• Older women are more aggressive in generating employment than younger women or older men;
• Job growth in the informal sector is mainly generated by younger men and older women;
• There is no statistically significant difference in the ability of female and male entrepreneurs to generate increases in gross sales within an enterprise upon provision of increased access to credit.

The paper concludes that:

• A realistic program for micro credit programs is to bring about moderate increases in employment generation and household income, along with great improvements in the financial stability of the enterprise;
• These marginal improvements in their economic well-being may be enough to allow the (hopefully better educated) children of these entrepreneurs to lift their households into substantial increases in welfare.