Businesses led by women are more likely to be discouraged from applying for bank loans, but the reasons behind this have changed significantly since the pandemic. Before COVID-19, the main deterrent was fear of rejection, whereas during the pandemic concerns shifted towards credit conditions, perceived as more burdensome. This is the finding of a study by the University of Pisa, published in the international journal Small Business Economics.
The research was conducted by Giuliana Birindelli of the Department of Economics and Management at the University of Pisa and President of ADEIMF (the Italian Association of Scholars in Financial Intermediation and Markets and Corporate Finance), together with Claudia Capozza and Antonia Patrizia Iannuzzi of the University of Bari Aldo Moro. They analysed 7,852 firms in the pre-COVID period (2018–2020) and 6,292 during the pandemic (2020–2021), using data from the World Bank Enterprise Survey. The sample included non-agricultural small and medium-sized European enterprises across various sectors, including manufacturing, construction, trade and services.
The results show that women entrepreneurs are more inclined to refrain from applying for bank financing even when they need it. However, the underlying motivations have changed. Before the pandemic, discouragement was mainly linked to demand-side factors: many women entrepreneurs chose not to apply for credit because they expected their application to be rejected, a phenomenon known as ‘expected denial’. However, during the pandemic supply-side factors became more prominent: women were more likely to avoid approaching financial institutions due to credit conditions considered too onerous. These included unfavourable interest rates, high collateral requirements, and loan amounts or maturities that were deemed inadequate.
This tendency to refrain from applying for credit is also reflected in firms with female ownership: the higher the share of women among the owners, the greater the probability that no credit application will be submitted.
“These results show that the difficulties faced by women-led businesses in accessing credit do not depend on a single factor, but rather on a set of dynamics involving both firm behaviour and the practices of financial intermediaries,” says Professor Giuliana Birindelli. “In Italy, as in the broader European context, there is a clear need to act on both fronts: on the one hand, by
reducing informational and cultural barriers that may lead to self-exclusion; on the other, by promoting more accessible and transparent credit conditions, especially during periods of crisis.”
