Gender discrimination, social networks and access to informal finance of Vietnamese small and medium enterprises

Analyses of topical policy issues

Gender discrimination, social networks and access to informal finance of Vietnamese small and medium enterprises

Thang Ngoc Bach^a, Thanh Le^b, Thang Xuan Nguyen^a,*, Khanh Hoang^c

a National Economics University, Vietnam

b University of Wollongong, Australia

c University of Economics, Ho Chi Minh City (UEH), Viet Nam

ARTICLE INFO

Article history:

Received 18 June 2022

Received in revised form 16 March 2023

Accepted 19 March 2023

Available online 22 March 2023

https://doi.org/10.1016/j.eap.2023.03.017

© 2023 Economic Society of Australia, Queensland. Published by Elsevier B.V. All rights reserved.

ABSTRACT

The issue of gender discrimination in the informal credit market is under-investigated given that existing studies largely consider formal bank loans. Using a rich dataset on access to informal loans and loan terms of Vietnamese privately-owned manufacturing small and medium enterprises over 2005-2015, this paper finds that female-run firms have a lower propensity to borrow and incur a higher cost of borrowing from informal sources than male-run counterparts. The empirical evidence on gender discrimination is robust to the control of different firm characteristics, firm-specific unobserved het-erogeneity, and selection bias. With the potential to mitigate gender discrimination, extended social networks are found to work in favor of female-run firms.

© 2023 Economic Society of Australia, Queensland. Published by Elsevier B.V. All rights reserved

Keywords

Gender discrimination, Social networks, Financial accessibility, Cost of funding, SMEs