Better Loans or Better Borrowers? : Impact of Meso-Credit on Female-Owned Enterprises in Ethiopia
This paper explores the impact of large, individual-liability loans on the growth of women-owned microenterprises in Ethiopia. Traditionally, microfinance institutions in Ethiopia have primarily catered to female enterprises with group lending sche...
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| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/974551531236525468/Better-loans-or-better-borrowers-impact-of-meso-credit-on-female-owned-enterprises-in-Ethiopia http://hdl.handle.net/10986/29984 |
| Summary: | This paper explores the impact of large,
individual-liability loans on the growth of women-owned
microenterprises in Ethiopia. Traditionally, microfinance
institutions in Ethiopia have primarily catered to female
enterprises with group lending schemes that provide very
small loans. The limitations of this model are two-fold: in
addition to these micro-loans being too small in size to
fuel meaningful business growth, many of the female
enterprises that are targeted with these loans face binding
constraints, such as concentration in lower-growth sectors,
lack of alternative job opportunities, limitations on time
and mobility, and restrictive gender norms. The paper
investigates the impact of credit to female entrepreneurs in
a novel context, by examining larger loans, provided to
growth-oriented women entrepreneurs. These entrepreneurs
fall in the "missing middle" or
"meso-finance" segment of the financial market
because their credit needs are too large for microfinance,
but not large enough for commercial banks. The paper uses a
propensity score matching methodology to examine the impact
of loans offered to women as part of the Women
Entrepreneurship Development Project, a program funded by
the World Bank International Development Association, that
targets growth-oriented women entrepreneurs in Ethiopia. The
results suggest that large, individual-liability loans can
make a significant difference in accelerating growth in the
business incomes and employment levels of women-owned enterprises. |
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