Performance of Women Entrepreneurs: Does Access to Finance Really Matter?

Abstract

Bangladesh adopts labor intensive industrialization and inclusive finance strategy to fight against poverty. The strategies help the disadvantaged women empower and encourage doing something independently. But most of women entrepreneurs concentrated on major four types of businesses: parlor, boutique, clothing and fashion, which limit access to finance. The lack of access to finance was suspected to hamper their business growth. To understand such relationship, the descriptive as well as econometric tools and techniques were used. Durbin-Wu-Hausman test was used to test the endogeneity of the loan size. The test statistics suggest that the loan size is exogenous. Therefore, using the simple OLS method with various forms of error variances the regression results are estimated. Finally, the Feasible GLS method has been used to correct the heteroscedasticity problem. The result shows that the credit constraints and the credit size affect the monthly turnover of women entrepreneurs. The relaxation of credit constraint increases 6 percent monthly turnovers holding other things remaining same and so, it can be concluded that relaxing credit constraints improves business performance of women entrepreneurs.