Access to and the use of finance in the UK are seen as major barriers preventing more women from developing successful businesses. However, research funded by the Economic and Social Research Council, found no evidence that banks deliberately discriminate against women business owners, but it is calling for changes in the training of bank loan officers, small business advisers and women entrepreneurs.
The research was conducted at the University of Glasgow and the University of Stirling. It aimed to determine the impact of gender on the lending decisions of a UK bank and to study the experience and perception of bank lending of existing business owners of both sexes.
Research was set against a background of public policy initiatives undertaken in the UK in recent years intended to increase female self-employment. Despite these, only 15 per cent of businesses are women-owned and the 26 per cent share of self-employed women has not changed in 15 years. This modest record contrasts sharply with other countries, particularly the USA where female self-employment has risen each year since 1976 and currently stands at a share of 39.6 per cent.
"We thought a fresh study of how gender impacts on the lending decisions of a UK bank was long overdue, particularly in the light of widespread automated credit scoring and over half of all bank employees now being women," said Professor Fiona Wilson, one of the three researchers who carried out the study. "It's particularly timely, as other recent research has found that female owned businesses pay a 1.1 per cent point premium relative to male owned businesses."
As a result of the findings, the research team recommend changes are made in training to ensure:
. Bank loan officers and small business advisers advise women business owners to have sufficient capital to start and sustain their businesses.
. The networks used by men and women bank loan officers are similar, as women officers were found to have less effective personal contacts for introducing new business loan applications than their male equivalents.
. All loan officers use the same processes when negotiating credit approval within the bank as women loan officers were found to have less strong internal communications with credit controllers than their male equivalents.
Many banks in the UK regard women-owned businesses as an important market. However, the research suggested that lending decisions by individual bank loan officers can reflect biased gender perceptions and opinions. It also found that bias is just as likely among male and female officers.
Commenting on work carried out with matched pairs of male and female business owners, Professor Wilson said, "Gender really does permeate and affect women's experience of business ownership. Our observations suggest that because of differences in age and industry experience, women can be viewed as possessing significantly less human and social capital prior to setting up their businesses than men."
For further information, contact:
Professor Fiona Wilson
tel.: 0141 330 4064
e-mail: f.wilson@mgt.gla.ac.uk
Professor Sara Carter
tel.: 01786 467347
email: sara.carter@stir.ac.uk
Alexandra Saxon/Annika Howard at ESRC
0797 1027 335/0777 4518 533
Email: alexandra.saxon@esrc.ac.uk
annika.howard@esrc.ac.uk
NOTES FOR EDITORS
1. The research report, 'Securing a Business Loan: How Important is Gender?' was funded by the Economic and Social Research Council (ESRC). Professor Fiona Wilson is based at School of Business and Management, Gilbert Scott Building, University of Glasgow, Glasgow, G12 8QQ. Professor Sara Carter is based at the Department of Management and Organization, University of Stirling, Stirling, FK9 4LA.
2. The research team comprised Professor Wilson University of Glasgow, Professor Sara Carter, University of Stirling, Dr Eleanor Shaw, University of Strathclyde and Dr Wing Lam, University of Central Lancashire. It analysed supply-side bank loan data gathered from 35 male and female bank loan officers in four locations of a major UK clearing bank. On the demand-side, initial telephone interviews were conducted with 100 entrepreneurs based in Central Scotland to gain background business information and to assist in creating a matched sample. This information was used to identify 30 pairs of matched (by business age, location and industry sub-sector) business owners who were interviewed in-depth using structured questionnaires regarding: resource acquisition; access to and use of capital; and experience and perceptions of bank lending.
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