Bank Credit Constraints for Women-Led SMEs: Self-Restraint or Lender Bias?

We test the existence of possible gender biases affecting firm behavior in demanding and obtaining bank credit using a cross‐country sample of European small‐ and medium‐sized enterprises (SMEs). We show consistent evidence that female‐led firms are more likely than their male counterparts to refrain from applying for loans. When they apply, female‐led enterprises do not seem to face gender discrimination from the lender. Interest- ingly, however, signs of gender bias appear to arise during the upside phase of the economy. Overall, our study provides support for policy actions aimed at reducing the frictions faced by women‐led SMEs when accessing credit markets.