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Gender Heterogeneity in Ease of Access to Credit: The Case of a Ghanaian MFI

Year 2013, Volume: 6 Issue: 2, 0 - 0, 01.06.2013

Abstract

Özet: Microfinance has been proposed as a way of bridging the gender gap in access to finance but the question that still remains is whether the gap is really closed or not. It is on record that in the formal financial sector, one of the causes of the gap is educational characteristics of households and owners of micro and small enterprises (MSEs) especially those in developing countries like Ghana. The question of whether education is an issue of easing access to credit in the informal sector has not been answered. The paper examines the effects of reading ability and level of schooling on ease of access to micro-credit among 485 women and men entrepreneurs in two districts in Ghana. The econometric estimation methods adopted in the study are probit and IV probit which corrects for possible endogeneity. Results show that controlling for other household covariates and enterprise characteristics, education of enterprise owners eases access to credit in the informal sector and there is significant difference in access to credit among men and women borrowers. Other sources of differences in access to micro-credit are past credit relationship of borrowers, location of borrowers and their businesses and household size. The paper offers recommendations from the supply side to promote sustainable micro-financing of SMEs in the informal sector.

References

  • Aleem, I. (1990). Imperfect information, screening, and the costs of informal lending: A study of a rural credit market in Pakistan” The World Bank Economic Review, Vol.4 No.3 pp.329 - 349
  • Bravo-Baumann, H. (2000). Capitalization of experiences on the contribution of livestock projects to gender issues.
  • Working Document. Bern, Swiss Agency for Development and Cooperation. Cameron, C.A & Trivedi, P.K (2010). Microeconomics using STATA, revised edition, STATA Press Publications
  • Desprez-Bouanchaud, A., Doolaege, J. & Ruprecht, L., (1987). Guidelines on gender-neutral language, Paris: UNESCO.
  • Diagne, A. & Zeller, M. (2000). Access to credit and its impact on Welfare in Malawi Research Report 116
  • International Food Policy Research Institute Washington, D.C. Domeher, D & Raymond, A (2012). Access to Credit in the Developing World: does land registration matter? Third
  • World Quarterly, Volume 33, Number 1, pp. 161-175(15) Fatoki, O & Chigamba, C (2011). Factors influencing the choice of commercial banks by university students in South
  • Africa, International Journal of Business and Management Vol. 6, No. 6; pp.66-76
  • Galindo, A & Schantiarelli, F (2003). Credit constraints and investment in Latin America. Inter-American
  • Development Bank, Washington D.C. Gemmel, N. (1996). Evaluating the impacts of human capital stocks and accumulation on economic growth: Some new evidence. Oxford Bulletin of Economics and Statistics, 58(1), pp.9-28.
  • Ghana Statistical Service (2008). Report on Ghana Living Standard Survey Round 5, GSS: Accra.
  • Honohan, P & Beck, T (2007), Making Finance Work for Africa, World Bank, Washington, D.C.
  • Isaksson, A (2002), Trade credit in Kenyan manufacturing: Evidence from plant-level data, SIN Working Paper No 4, May 2002
  • Kongolo, M (2012). An empirical assessment of women’s access to land and credit in North West Province, South
  • Africa: A probit analysis, African Journal of Agricultural Research Vol. 7(3), 352-357. Kozan, M. K., Oksoy, D., & Ozsoy, O (2006). Growth plans in small businesses in Turkey: Individual and environmental influences. Journal of Small Business Management, 44 (1), 114-129.
  • Kumar, A., & Francisco, M (2005). Enterprise size, financing patterns and credit constraints in Brazil: Analysis of data from the investment climate assessment survey. World Bank Working paper No.49.
  • Nguyen, C.H. (2007). Determinants of credit participation and its impact on Household Consumption: Evidence from rural Vietnam, Discussion paper 2007/03
  • Okurut, N.( 2006). Access to credit by the poor in South Africa: Evidence from household survey data 1995 and 2000 Department of Economics, University of Botswana
  • Stellenbosch, Economic Working Papers: 13/06 Okurut, F.N., & Schoombee, A. (2007). Credit market access in Uganda: Evidence from household survey data 1999/2000. South Africa. Journal of
  • Economics and Management Science, 10 (3): pp.371-383. Omonona, B. T, Lawal J. O & Oyinlana, A. O (2010). Determinants of Credit Constraint Conditions and Production
  • Efficiency Among Farming Households in South western Nigeria, The Social Sciences Vol.5 Issue: 4, 326-331. Peachey, S., (2004). Comment: Government of Kenya stakeholders’ forum on financial sector reforms, Mombassa.Kenya
  • Roe, A. R., (2004). Key issues in the future development of Kenyan banking, Paper to Government of Kenya stakeholders’ forum on Financial Sector Reforms, Mombassa, Kenya
  • Schreiner, M. & Woller, G. (2010). A Simple Poverty Scorecard for Ghana, Consultative Group to Assist the Poorest.
  • Silva, F & Carreira, C (2010). Financial constraints: Are there differences between manufacturing and services. viewed 01 November 2010, http://gemf.fe.uc.pt.
  • Stango V & Zinman, J. (2008). The price is not right (not even on average): Exponential growth bias, present-biased perceptions and household finance. Working Paper, Dartmouth College
  • World Bank (2007). Uganda: Moving beyond recovery, investment and behaviour change for growth. Country
  • Economic memorandum: Summary and Recommendations. The World Bank: Washington D.C. World Bank (2004). Investment climate assessment: Improving enterprise performance and growth in Tanzania.
  • Private Sector Development Unit, Africa Region,Washington, DC. World Economic Forum. (2009). The Global Competitiveness Report 2009–2010. Geneva: World Economic Forum
  • Zeller, M. (1994). Determinants of credit rationing: a study of informal lenders and formal credit groups in
  • Madagascar, World Development, 22(1)
Year 2013, Volume: 6 Issue: 2, 0 - 0, 01.06.2013

Abstract

Özet: Microfinance has been proposed as a way of bridging the gender gap in access to finance but the question that still remains is whether the gap is really closed or not. It is on record that in the formal financial sector, one of the causes of the gap is educational characteristics of households and owners of micro and small enterprises (MSEs) especially those in developing countries like Ghana. The question of whether education is an issue of easing access to credit in the informal sector has not been answered. The paper examines the effects of reading ability and level of schooling on ease of access to micro-credit among 485 women and men entrepreneurs in two districts in Ghana. The econometric estimation methods adopted in the study are probit and IV probit which corrects for possible endogeneity. Results show that controlling for other household covariates and enterprise characteristics, education of enterprise owners eases access to credit in the informal sector and there is significant difference in access to credit among men and women borrowers. Other sources of differences in access to micro-credit are past credit relationship of borrowers, location of borrowers and their businesses and household size. The paper offers recommendations from the supply side to promote sustainable micro-financing of SMEs in the informal sector.

References

  • Aleem, I. (1990). Imperfect information, screening, and the costs of informal lending: A study of a rural credit market in Pakistan” The World Bank Economic Review, Vol.4 No.3 pp.329 - 349
  • Bravo-Baumann, H. (2000). Capitalization of experiences on the contribution of livestock projects to gender issues.
  • Working Document. Bern, Swiss Agency for Development and Cooperation. Cameron, C.A & Trivedi, P.K (2010). Microeconomics using STATA, revised edition, STATA Press Publications
  • Desprez-Bouanchaud, A., Doolaege, J. & Ruprecht, L., (1987). Guidelines on gender-neutral language, Paris: UNESCO.
  • Diagne, A. & Zeller, M. (2000). Access to credit and its impact on Welfare in Malawi Research Report 116
  • International Food Policy Research Institute Washington, D.C. Domeher, D & Raymond, A (2012). Access to Credit in the Developing World: does land registration matter? Third
  • World Quarterly, Volume 33, Number 1, pp. 161-175(15) Fatoki, O & Chigamba, C (2011). Factors influencing the choice of commercial banks by university students in South
  • Africa, International Journal of Business and Management Vol. 6, No. 6; pp.66-76
  • Galindo, A & Schantiarelli, F (2003). Credit constraints and investment in Latin America. Inter-American
  • Development Bank, Washington D.C. Gemmel, N. (1996). Evaluating the impacts of human capital stocks and accumulation on economic growth: Some new evidence. Oxford Bulletin of Economics and Statistics, 58(1), pp.9-28.
  • Ghana Statistical Service (2008). Report on Ghana Living Standard Survey Round 5, GSS: Accra.
  • Honohan, P & Beck, T (2007), Making Finance Work for Africa, World Bank, Washington, D.C.
  • Isaksson, A (2002), Trade credit in Kenyan manufacturing: Evidence from plant-level data, SIN Working Paper No 4, May 2002
  • Kongolo, M (2012). An empirical assessment of women’s access to land and credit in North West Province, South
  • Africa: A probit analysis, African Journal of Agricultural Research Vol. 7(3), 352-357. Kozan, M. K., Oksoy, D., & Ozsoy, O (2006). Growth plans in small businesses in Turkey: Individual and environmental influences. Journal of Small Business Management, 44 (1), 114-129.
  • Kumar, A., & Francisco, M (2005). Enterprise size, financing patterns and credit constraints in Brazil: Analysis of data from the investment climate assessment survey. World Bank Working paper No.49.
  • Nguyen, C.H. (2007). Determinants of credit participation and its impact on Household Consumption: Evidence from rural Vietnam, Discussion paper 2007/03
  • Okurut, N.( 2006). Access to credit by the poor in South Africa: Evidence from household survey data 1995 and 2000 Department of Economics, University of Botswana
  • Stellenbosch, Economic Working Papers: 13/06 Okurut, F.N., & Schoombee, A. (2007). Credit market access in Uganda: Evidence from household survey data 1999/2000. South Africa. Journal of
  • Economics and Management Science, 10 (3): pp.371-383. Omonona, B. T, Lawal J. O & Oyinlana, A. O (2010). Determinants of Credit Constraint Conditions and Production
  • Efficiency Among Farming Households in South western Nigeria, The Social Sciences Vol.5 Issue: 4, 326-331. Peachey, S., (2004). Comment: Government of Kenya stakeholders’ forum on financial sector reforms, Mombassa.Kenya
  • Roe, A. R., (2004). Key issues in the future development of Kenyan banking, Paper to Government of Kenya stakeholders’ forum on Financial Sector Reforms, Mombassa, Kenya
  • Schreiner, M. & Woller, G. (2010). A Simple Poverty Scorecard for Ghana, Consultative Group to Assist the Poorest.
  • Silva, F & Carreira, C (2010). Financial constraints: Are there differences between manufacturing and services. viewed 01 November 2010, http://gemf.fe.uc.pt.
  • Stango V & Zinman, J. (2008). The price is not right (not even on average): Exponential growth bias, present-biased perceptions and household finance. Working Paper, Dartmouth College
  • World Bank (2007). Uganda: Moving beyond recovery, investment and behaviour change for growth. Country
  • Economic memorandum: Summary and Recommendations. The World Bank: Washington D.C. World Bank (2004). Investment climate assessment: Improving enterprise performance and growth in Tanzania.
  • Private Sector Development Unit, Africa Region,Washington, DC. World Economic Forum. (2009). The Global Competitiveness Report 2009–2010. Geneva: World Economic Forum
  • Zeller, M. (1994). Determinants of credit rationing: a study of informal lenders and formal credit groups in
  • Madagascar, World Development, 22(1)
There are 30 citations in total.

Details

Journal Section Review Article
Authors

James Atta Peprah This is me

Publication Date June 1, 2013
Published in Issue Year 2013 Volume: 6 Issue: 2

Cite

APA Peprah, J. A. (2013). Gender Heterogeneity in Ease of Access to Credit: The Case of a Ghanaian MFI. Beykent Üniversitesi Sosyal Bilimler Dergisi, 6(2).

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