Access to finance, human capital, and the performance of women-owned informal enterprises in India

This study examines how access to finance influences labor productivity and profitability in informal enterprises, with a focus on gender, human capital, and sources of credit. Using the National Statistical Office Annual Survey of Unincorporated Sector Enterprises (2022–2023), the study offers a novel contribution by distinguishing between formal, constructive-informal, and underground financing channels and evaluating the interaction between credit access, women’s ownership, and human capital. The results show that access to credit, education, and vocational training significantly improves enterprise performance, while interaction effects suggest that credit plays an important equalizing role, particularly for uneducated and untrained female-owned enterprises. Formal and constructive informal finance improve productivity, especially in manufacturing, whereas underground credit appears less effective, particularly in trade enterprises. The findings highlight the importance of combining targeted financial inclusion policies with human capital development to reduce gender-based productivity gaps and improve the sustainability of informal enterprises.