Are foreign banks a good option for women entrepreneurs in Bangladesh seeking financing?

Abstract

In Bangladesh, women’s participation in small businesses is rapidly increasing. Although the lack of capital appears to be a significant barrier, banks play an important role in assisting women in obtaining small business loans. This study examines whether foreign banks operating in Bangladesh facilitate access to financing for women entrepreneurs. Using primary data collected from 100 women-owned small businesses in Dhaka, this study employs probit regression models to estimate the likelihood of obtaining small business loans from foreign banks. The results indicate that the accessibility of credit by women entrepreneurs is much less when they apply to foreign banks. The estimated marginal effects convey that the likelihood of securing financing on application to a foreign bank is expected to be lower by about 52 percentage points than domestic banks. The findings also reveal the significance of firm performance, managerial traits, and bank-firm relationships in determining access to credit. Overall, the findings suggest that foreign banks contribute only marginally to small business financing for women entrepreneurs in Bangladesh, implying the need for more targeted policy interventions.

Keywords: {'name': 'Access to Financing, Bangladesh, Foreign Banks, Small Business, Women Entrepreneurs.'}

Authors & affiliations

Afrin Sultana
University of Dhaka

Md. Johir Rayhan
University of Dhaka

Sadia Noor Khan
University of Dhaka

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