A classic result in the microenterprise literature is that easing financial constraints benefits male but not female microenterpreneurs. In this paper we show that easing financial con- straints of female enterpreneurs does in fact result in significant growth in household income, but only when income from all enterprises within a household are taken into account. Our analysis draws upon a field experiment conducted with microfinance clients in Kolkata in 2007 (Field, Pande, Papp, and Rigol, 2013). Female microfinance clients were randomly assigned either the classic microfinance contract or a contract that gave them greater repayment flexibility. We show that if we estimate the returns to improved financial access (i.e. being given a more exible contract) at the enterprise-level then we replicate earlier studies. That is, in households that receive the grace period contract male-owned enterprises but not female-owned enterprises report higher profits observe a significant disparity between returns for male- and female- owned enterprises. However, once we aggregate profits to the household-level we observe that households with a female enterprise are as likely to benefit from improved financial access as household with a male enterprise.
Field, E.; Pande, R.; Rigol, N. PEDL Research Paper. Household Matters: Returns to Capital amongFemale Microentrepreneurs. (2014) 22 pp.