Banking Concentration and Women’s Entrepreneurship in Developing Countries

Abstract

The purpose of the present study is to assess how bank concentration affects female entrepreneurship in 70 developing countries using data for the period 2000–2019. The empirical evidence is based on ordinary least squares fixed effects and the Generalized Method of Moments regression. Three main female entrepreneurship outcome variables are employed, namely women’s entrepreneurial activity rate, women business leaders and the number of jobs created by businesses run by women. Two main moderating variables are employed, namely education and access to credit. The analysis is tailored towards assessing the direct impact of bank concentration on female entrepreneurship outcomes as well as the indirect effect pertaining to how education and credit access, as moderating variables, influence the effect of bank concentration on female entrepreneurship. The results show that bank concentration broadly reduces female entrepreneurship. The negative effect is robust to the inclusion of additional control variables, an alternative estimation technique and a different measurement of bank concentration. Within interactive regressions’ purview, the unconditional effect of bank concentration reduces female entrepreneurship, while education and credit access further complement bank concentration to reduce female entrepreneurship. This evidence of negative synergies is explained, and policy recommendations are provided.