Contract Design, Business Growth, and Female Entrepreneurship: Evidence from Microfinance in India

Tuesday, 5 December, 2017
Abstract: 
Several field experiments find positive returns to grants for male and not female micro- entrepreneurs. But these analyses overlook that female entrepreneurs often reside with a male business owner. Using data from randomized trials in India, Sri Lanka and Ghana, we show that the gender gap in microenterprise performance is not due to a gap in aptitude. Instead, low average returns of female-run enterprises reflects the fact that women’s capital is typically invested into their husband’s enterprise. Household-level income gains are equivalent regardless of the grant or loan recipient’s gender.