Female business leaders seek less credit, face equal rejection

A Banque de France study reveals that female-led businesses in France utilize less bank credit than those led by men.

This disparity primarily stems from a lower demand for credit among female executives, rather than a higher rejection rate from banks.

Econometric analysis, controlling for business and leader characteristics, confirms that female-led businesses request between 12% and 26% less credit, depending on the financial instrument.

Crucially, the probability of a loan application being rejected does not significantly differ between female and male-led businesses once company and leader characteristics are accounted for.

Descriptive statistics show that, between 2012 and 2023, 24% of female-led businesses applied for a line of credit, compared to 31% of male-led companies.

This gap in credit applications has not narrowed meaningfully over the past decade.

The slow improvement in women's position in the business world is a recognized issue.

The gender pay gap remains substantial at around 22% in 2023 in the private sector, and women are significantly under-represented in senior management positions (25% in 2023).

While representation on boards has increased due to quotas, access to financing remains a concern.

One study on French start-ups found female entrepreneurs 22% less likely to obtain external equity financing.

This unequal access raises questions of fairness and economic efficiency, potentially leading to underutilisation of talent and reduced business growth.