Entrepreneurship and gender: Differential access to finance and divergent business value

In this paper we examine differences in access to finance and business value by gender. Using recent data from the German Socio-Economic Panel, instrumented linear probability models show that an increase in personal wealth substantially affects the probability of being a business owner only among females. This is indicative of differential access to finance by gender. Among business owners, fixed-effects regressions reveal that obtaining a bank loan increases mean total business value more for females than for males. Thus, possession of a bank loan appears to be a critical factor in explaining the business value gender gap.