On the relationship between financial constraints and firm owners’ gender: does Sub-Saharan Africa mirror other regions?

Abstract This paper examines regional differences in gender parity regarding firms’ access to finance in developing countries. The study employs data from 133,525 firms across 113 developing countries and six regions from 2006 to 2023 to analyze whether female-owned businesses experience greater financial constraints than their male counterparts, with particular attention to regional heterogeneity. The gender gap among firms in Europe and Central Asia, East Asia and the Pacific, the Middle East and North Africa, Latin America and the Caribbean, and South Asia can be explained by observable firm characteristics. In contrast, there is a robust gender gap for businesses in Sub-Saharan Africa: all else equal, are approximately 3–4 percentage points more likely to experience a binding financial constraint. This gender gap persists even after controlling for a country’s level of development, the enforceability of contracts, and government involvement in credit markets. Furthermore, the gap remains consistent across various types of firms, including sole proprietorships, small firms, medium firms, manufacturing firms, and businesses in the service sector. We also investigate whether the gender gap narrows or disappears in countries with greater gender equality. We find that institutional gender equality does not close the financial access gap, indicating the presence of structural barriers to finance for female-owned businesses in SSA.