Correlates of gender and credit behavior in small firms: evidence from a small, developing economy.

Williams, Densil A. ; KnIfe, Kadamawe A.K.

INTRODUCTION

The financing of small firms has been a matter of enormous interest to policymakers and academic researchers alike (e.g. Berger & Udell, 1995; Robb & Wolken 2002; Beck et al., 2008; Autio 2007; Cole & Mehran, 2009 etc). This is even more so in developing economies where market imperfections are high and the information asymmetry between small and large firms is strong. Small firms, especially those in developing economies, generally lack proper record keeping, have poor management and do not always have a structured business plan (GEM, 2007). These characteristics make the risk of lending to such firms much higher (Berger & Udell, 1995). The situation however, becomes grim when the issue of gender is thrown into the analysis (1). The body of literature looking at gender and entrepreneurship shows that there are differences in the financing behaviour of male and female-owned firms (e.g. Brush, 1992; Cole & Mehran, 2009; Carrington, 2006; Robb & Wolken, 2002), and in many cases gender characterisation impacts negatively upon women during this process of financing their enterprises (Marlow & Patton, 2005). It is these considerations that have motivated this study. A clearer understanding of how female-owned firms differ from male-owned firms in their financing behaviour in each context is critical for policymakers and investors, who are interested in providing financing for small firms. These facts in the context of a developing country are critical for this area of research given the paucity of data on the subject in these jurisdictions.

This paper aims to test the hypothesis that gender is a critical variable that can explain the credit behaviour of small firms from developing economies. Researchers have contended that the financial characteristics between male and female-owned firms can be explained by firm and owner characteristics and not necessarily by imperfections in the market (Cole & Mehran, 2009). Having some baseline facts on whether or not these characteristics vary according to gender, will undoubtedly provide a critical basis on which to test the study hypothesis. There is no doubt that these baseline facts are even more important for small firms from small, developing economies where there is limited information on such firms thus increasing their risk profile and make lending to them more onerous.

This study will contribute to the extensive literature on gender and entrepreneurship. The novelty of the contribution is in the context specific nature of the work. The study will identify those important gender differences in relation to firm and owner characteristics, and also the credit behaviour of small firms in Jamaica. While some work exists on women and entrepreneurship in general with respect to Latin America and the Caribbean (GEM, 2007), there is no study that has reported on a baseline of stylized facts about gender and credit behaviour in small firms in Jamaica. This study will motivate other works in this area. Further, the addition of this new dimension to the literature will provide further insights to theorists in the field who are concerned with the development of a general explanation for the relationship between gender and credit behaviour in the small firm.

To achieve the aim of this study, the remainder of the paper is organised as follows. The next section will reflect on the extant literature relating to gender and credit relationships. Following this, the paper will proceed to highlight the method used to test the hypothesis. It will also describe the research sample and contextualise the sample in the Jamaican environment. The next section will present the results from the analysis followed by a discussion of these results. The paper ends with some concluding remarks on the implications of the findings for research and policy.

THE EXTANT LITERATURE

The extensive literature on gender and entrepreneurship shows that there are differences between male and female-owned firms along a number of attributes (Ahl, 2006; Brindley, 2005). Brush (1992) for example, argued that differences in male and female psychology can account for differences on a number of attributes such as education level of firm owners, experience level of the owners, and the performance of the firm. Verheul& Thurik (2001) noted that there are also differences in the way they finance their business, which can be attributed to the type of business and the type of management and experience of the entrepreneur. Brindley (2005) examined the risk and entrepreneurial experience of women. Further, Paula (2002) argued that socio-cultural norms establish gender structured constraints which influence access to financing and the overall success of firms. This review however, will focus on the relationship between gender and credit behaviour of the firm. Other control variables such as owner and firm characteristics will also be analysed to determine whether or not credit behaviour is a function of market imperfections or is merely a function of the characteristics of the owner and firm. Researchers have argued that credit market imperfections do not result in discrimination of lending patterns based on gender (Robb & Wolken, 2002). It is the aim of the analysis in this paper to shed light on this assumption.

Researchers have presented some interesting results in their analyses of the role of gender on the credit behaviour of firms. For example, Cole & Mehran (2009) in looking at gender and the availability of credit in privately held US firms found that female-owned firms are significantly smaller than male-owned firms. They are also much younger as measured by the age of the firm, and their organisational form reflects sole proprietorship compared to male-owned firms which are mostly corporations. These firms normally operate in the retail trade and business services sub-sectors and less likely in the wholesale business. Most critically, the researchers found that female-owned firms are more likely to have shorter banking relationships and fewer relationships with their financial institutions. Verheul & Thurik (2001) supported this finding by arguing that female entrepreneurs have a smaller amount of start-up capital, which ultimately influences the type and size of their organisations. Indeed, studies have shown that firms owned by women are less likely to use commercial banks for their financial services (Carter & Rosa 1998; Haynes, 1999). This short term relationship may impact on the firm's ability to gain access to the credit market as it may indicate that the firm does not have a formal relationship in the credit market (Burger & Udell, 1995). Importantly, when women-owned firms apply for credit, they are more likely to obtain it although they tend to be credit constrained (Cole & Mehran, 2009).

Another difference identified in the credit behaviour of the firm along the lines of gender is the risk averse nature of women-owned firms relative to male-owned firms (Haines, Orser, and Riding, 1999; Brush et al., 2001). Researchers (e.g. Jianakoplos & Bernasek, 1998) argued that women are indeed more risk averse than men, because in their household, as wealth increases, the holdings of risky assets increases by smaller amounts for females relative to males. Also, to support the risk averse hypothesis, other researchers have found that women make more conservative choices than men in their defined-contribution retirement plans (Sunden & Surett, 1998). Robb & Wolken, (2002) in their study of US firms found that businesses owned by women were less likely to have applied for credit in the last three years. This risk averse behaviour will no doubt affect wealth endowments. The risk averse nature of women-owned firms generally account for them being credit constrained because of their limited access to the credit market. Some firms may also not apply for credit because of the fear of rejection. This may account for the appearance of female-owned firms being constrained by credit (Robb & Wolken, 2002).

Interestingly, although women-owned firms are seen as more risk averse, researchers have found that female-owned firms are higher risk enterprises relative to male-owned firms. In other words, female-owned firms had lower levels of creditworthiness relative to male-owned firms. This in part may be due to the organisational form which female-owned firms generally take. Organisational form (the legal framework under which a firm operates) will affect the ability of creditors to collect on delinquent loans, and therefore; affects the supply of credit to a firm (Robb & Wolken, 2002). Generally, female-owned firms tend to be organised as proprietorship and less as corporation (Cole & Mehran, 2009). This again may be as a result of the level of start-up capital to which the owner had access. Also, a number of other factors could be at play in influencing the risk and behaviour of female-owned firms (Brindley, 2005). These may include social, personal and political factors which have been found to impact on the risk tolerance of investors.

Gender differences vary among firms in relation to demographic characteristics. Researchers have shown that women-owned businesses are smaller and younger relative to male-owned firms (Brush, 1990; Robb & Wolken, 2002). Additionally, female-owned businesses are more likely to be organised as sole proprietorships than as corporations (Robb & Wolken, 2002). Further, these researchers found that on average, male-owned firms have principals with higher levels of education than female-owned firms. This was also true for the level of experience as designated by the total number of years the owner has spent operating a business. Male owners on average had a relatively higher level of experience than female owners. Male owners were also found to be slightly older than female owners. These findings relate to the international context. The pattern of behaviour in the Jamaican context is still not known. The idiosyncrasies of the Jamaican economy make it important for context specific studies to be carried out. This will add fresh insight to the research in this area. These demographic characteristics will be analysed in the Jamaican context to determine whether or not the situation in Jamaica is unique relative to the international context.

The external environment in Jamaica is not the same as in the US or Europe. Jamaica is an economy characterised by a high level of debt to gross domestic product, high crime rate, high level of females in tertiary education compared to males, a population that is almost equally distributed between males and females (51% male and 49% females). Given these conditions which differ from the US or Europe where debt to gross domestic product is lower, crime rate is lower, literacy rate is higher etc, it is expected that the differences identified between male and female-owned firms in those jurisdictions may not be similar to the ones in the Jamaican environment. As such, this study will identify those characteristics that differentiate male-owned and female-owned firms in the Jamaican context. This will go a far way in helping policymakers to design the right mix of policies to help these firms to obtain the necessary financial capital for the success of the business.

GENDER AND CREDIT IN JAMAICA

The Global Entrepreneurship Monitor (GEM) reports that the proportion of males engaged in entrepreneurship is generally higher than females in all countries they studied except for one, Angola (GEM, 2008). In the case of Jamaica, the ratio of male to female-owned firms is about 55 % to 45%. Significantly, more males (8 per cent) when compared to females (6 percent), could be defined as opportunity entrepreneurs, meaning that they started a business because they were stimulated by an opportunity to do business rather than by the necessity to do business. These findings may suggest that females are more risk averse when it comes to doing business than males. Researchers argue that females take risks after carefully analysing a particular situation (Masters & Meier, 1988). This risk taking behaviour, it is asserted, has implications for the interaction with institutions that provide financing to firms.

Micro credit and micro enterprise issues have always been seen as political issues in Jamaica (Ffrench, 2008). When credit is given to micro enterprises in Jamaica, especially credit provided by the government, it is generally viewed as government funds so recipients do not develop the urge to pay back. This therefore affects the way in which credit is disbursed in the Jamaican environment. The landscape for credit in Jamaica consists of both public and private institutions. In the private sector, there is the commercial banking sector which has two dominant players (Bank of Nova Scotia and National Commercial Bank) that exert significant power over the market. There are four other players that generally follow the lead of the more dominant players. Currently, the commercial banking sector is in heavy competition to gain clientele from the small firm sector, with the two dominant players having established departments dedicated to serving the small firm sector. They also offer preferential loan terms to the firms in this sector as a way to attract them. Between the two dominant players in the commercial banking sector, they have approximately one billion (J$1billion) of loanable funds available to the small firm sector. This diversification into the small firm sector will become even more robust in light of the reduction in the banks' revenue streams from the recently negotiated debt exchange programme with the Government of Jamaica (2).

In the public sector, a number of government institutions also provide funding to the small business sector. These include but are not limited to: Micro Investment Development Agency (MIDA), Micro Enterprise Financing Limited (MEFL), National Export-Import Bank (EX-IM Bank), Jamaica Business Development Corporation (JBDC) and, the National Development Foundation of Jamaica (NDFJ). These institutions in 2008, provided in excess of 1.8 billion (J$1.8billion) in loanable funds to the small business sector. Given the developmental nature of these institutions, it is not surprising that they direct most of their funding towards the most vulnerable groups in society. Indeed, data from MIDA show that the majority of the beneficiaries are females and these females are in the services and vending industries (Ffrench, 2008). Micro credit is seen as a way to liberate these groups from poverty and gain greater upward social mobility.

The level of funding available to the small business sector in Jamaica has improved considerably compared to two or three decades ago. Although there is a massive increase in the number of private and government institutions that are providing funding for firms in this sector, there is still the perception that the funding is not sufficient to address the challenges which confront the sector. The major sources of funds are: equity, debt, government subsidies, private individuals, venture capital, and initial public offerings (IPOs). Besides debt financing, most of the players in the sector do not believe that there is sufficient funds available otherwise. Although there is a strong perception that debt financing is high relative to the other sources of funds, there are issues which surround the ability to access this financing. The issues are even more challenging as they relate to female-owned firms (PIOJ, 2009). It is the hope that this paper, through the presentation of a set of stylized facts will be able to highlight these issues so that further work can be carried out in order to remedy the issues identified.

The extant literature presents a set of factors that have distinguished male-owned firms from female-owned firms. However, these findings relate to contexts which have different socioeconomic realties from the Caribbean region. Therefore, we are not clear as to their applicability to Caribbean economies such as Jamaica. Policymakers who are designing policies to finance these small firms will have to understand the idiosyncrasies of these enterprises so that the right policy mix can be applied. Since male and female-owned firms show differences in their financing behaviour, it is important that policymakers understand the factors that motivate the behaviour in their particular jurisdiction so that the correct firms can be targeted. Taking a one size fits all approach will not be helpful in guiding policy in this regard.

STUDY METHOD AND DATA

The Sample

This study draws on data from a survey of 247 small firms in the Jamaican economy. A total of 247 survey instruments were administered and 75 were completed with full data for this study. Sixty eight percent (68%) or51 firms of the completed surveys were male-owned businesses while thirty two percent (32%) or 24 firms were female-owned businesses. These businesses represent less than 1% of the total population of firms in the economy. Unofficial estimates suggest that there are over 360,000 micro small and medium businesses in the Jamaican economy (Jamaica Gleaner, 2009). Although the sample represents a small portion of the population of businesses, we tried to ensure representativeness by making sure that all the 14 parishes and every polling district (PDs) were covered. The data revealed from this sample is very instructive and will shed light on a very important subject in the Jamaican context.

Because there is no established sample frame for small businesses in Jamaica, the research used the snowballing technique (Babbie, 2004) to develop a list of businesses across the 14 parishes and all polling districts. The data gathering phase began with information the researchers could ascertain on small businesses from institutions such as the Small Business Association of Jamaica (SBAJ), Banks, Private Sector Bodies (e.g. Private Sector Organisation of Jamaica (PSOJ) and other umbrella business organisations. Each respondent was asked to name other similar small businesses in their location--not all of the firms that were contacted were willing to participate in the study. From the contacts made, a total of 247 firms were interviewed across all the polling districts in Jamaica.

The key informant in these firms was the principal owner. They were asked to complete the research questionnaire under the guidance of a researcher who was trained for this purpose. The interviews were geared towards gathering information on all aspects of the firm including ownership structure, business leadership, succession planning, resource planning, governance and citizenship to general questions on race and ethnicity. The questions were developed based on a comprehensive survey of the extant literature, feedbacks from experts in the field and feedbacks from a pilot testing of earlier drafts of the research instrument. Indeed, this method of developing the instrument allows for the derivation of variables that are comparable with previous works in the field thus better aiding other researchers to build a stronger evidence base for future works. It also helps to identify those variables that are specific to the Jamaican context.

THE VARIABLES USED IN THE STUDY (3)

This study is generally concerned with how gender relates to the credit behaviour in small firms. Therefore, the critical variables of interest are: gender and credit behaviour. Gender is captured by biological difference. It looks at whether or not the principal is male or female. This is captured as a dichotomous variable. The other critical variable, credit behaviour is not as easy to measure. For this variable, indicators such as financing obtained for business growth; financing obtained for business start-ups, and services obtained from banks are used to capture the concept. These indicators are similar to indicators used in other studies to capture credit behaviour (e.g. Robb & Wolken, 2002; Cole & Mehran, 2009).

Since gender is not the only variable that might influence credit behaviour (Brindley, 2005), other commonly studied factors were also incorporated in the analysis. These could be considered as control variables, as used in the econometric sense of the word. These control variables include: owner characteristics as indicated by age, education level and work experience and firm characteristics as indicated by size, age and organisational form. Size is broadly defined as the number of employees in the firm, while age is defined as the number of years in operation since establishment. Organisational form looks at the legal structure the business takes. These variables are also representative of variables used in previous works (Bush, 1992; Cole & Mehran, 2009; Robb & Wolken, 2002 etc.). Indeed, given the difficulty of collecting data on small firms in the Jamaican economy, the research team had to use variables that were easily identifiable and for which respondents were willing to share information. These firms are privately owned so they are under no obligation to provide data on their operations. The choice of variables selected for this study took this realisation into consideration.

ANALYSIS TECHNIQUE

The purpose of the study is to determine whether or not gender impacts the credit behaviour of small, locally-owned firms in Jamaica. Uni-variate statistical analysis was used to shed light on this issue. To carry out this analysis, the gender of the main principal in the firm was cross tabulated with indicators of the owner characteristics, firm characteristics, and the financial behaviour. The percentages for male and female-owned firms by selected firm and owner characteristics, and financial behaviour were calculated. The results from these uni-variate analyses are reported in the next section below. This simplified technique was considered appropriate given the limited size of the sample and the quality of the data within the sample. Also, given that the real aim of this paper is to derive some baseline facts as they relate to gender and credit behaviour in small, locally-owned firms, the technique used is deemed appropriate.

RESULTS

This section of the paper presents the findings of the results from the analyses of the data. Here, the results are reported without any detailed discussion of the findings. This will be done in the subsequent section.

Owner Characteristics

Two indicators of interest were used to capture this variable. These are: education as measured by the principal owner's level of certification reflected in their school leaving certificate attained, and work experience as measured by the number of years the owner spent operating a business. The results from this analysis and the correlation with gender are reported below.

Firm Characteristics

Three indicators of interest were used to capture this variable. These are: size as measured by the number of employees in the firm, firm age as captured by the number of years the firm has been in operation, and organisational form as measured by the legal structure of the firm, i.e. proprietorship, partnership and so on. The results from this analysis and the correlation with gender are reported below.

Financing Behaviour

Three indicators of interest were used to capture this variable. These are: the services which the principal obtained from a bank; the method for financing business growth, and the method for financing business start-up. These results and their correlation with gender are reported below.

The above results showed that female-owned firms are generally less represented in the overall sample than male-owned firms. A further exploration of this pattern is looked at in the next section of the paper. The results presented in this section are important as a basis for informing policy geared towards gender differences which hinder the growth and survival of Jamaican small, locally-owned businesses.

DISCUSSION

The results suggest that in relation to credit behaviour, firms differ based on the gender of the principal owner. Previous research suggests that the characteristics of successful entrepreneurs are mostly ascribed to men than to women-owned firms (Buttner & Rosen, 1988). This paper has focused on three critical variables that are attributed to the success of firms to see whether or not these attributes are indeed attributable to male-owned firms.

The literature suggests that female-owned firms have principals with a lower level of education compared to male-owned firms (Robb & Wolken, 2002). Education, which is a proxy for human capital is very important for the survival and growth of all firms (Jovanovic, 1982; Robb, 2000). This study found that male owners generally have a higher level of education than female owners. Critically, for owners with qualification at the university level, male owners outpaced females by two to one. This is surprising in the current context of the study, because in Jamaica, the ratio of females to males at the university level is 4 to 1. What this finding seems to suggest is that more educated females have decided to work for other persons rather than starting their own firms.

Human capital can also manifest itself in the form of experience acquired overtime (Becker, 1964; Robb & Wolken, 2002). Experience in this paper is captured as the total number of years the owner has spent operating a business. The data reveal that males generally have a higher level of experience compared to females who own a business. Importantly, for experience spanning more than 10 years, males out-numbered females by a margin of two to one. It is only in the category of 1-5 years of experience that female-owned firms showed any signs of matching up to male-owned firms. In all other categories, male-owned firms showed a higher level of experience than female-owned firms.

The two indicators which were used to capture the owner characteristics of the firm revealed that the level of human capital in male-owned firms is higher than those in female-owned firms. Because human capital plays such a significant role in the growth and survival of a firm, based on the result, it is expected that male-owned firms will survive longer than female-owned firms. The characteristics of the firm will provide some indication as to whether or not this is so in the Jamaican context.

Research has shown that female-owned firms tend to be much smaller and younger than male-owned firms (Brush, 1990). As shown in this research, firm size varied across the lines of gender. Male-owned firms are generally larger than female-owned firms with only one percent of female-owned firms having between 51-100 employees while the figure is 8 percent for male-owned firms. As it relates to age, significantly more male-owned firms are over 20 years old compared to female-owned firms. Generally, male-owned firms are older than female-owned firms. This is not surprising as the principals of male-owned firms had more experience than principals in female-owned firms. This experience, which is a reflection of the level of human capital in the firm, is deemed to be very critical for the growth and survival of the firm (Jovanovic, 1982).

As it relates to the organisational form as captured by the legal status of the firm, the results revealed that significantly more male-owned firms are organised as a limited liability company when compared to female-owned firms. The percentage of male-owned firms registered as a limited liability company was four times that of female-owned firms. Most female-owned firms were organised as partnership or proprietorship, a result which finds resonance with a similar study done in the USA (Robb & Wolken, 2002). Indeed, organisational form is critical because it gives some indication as to the ability of creditors to collect on delinquent loans and also their proclivity to supply credit to firms (ibid, pg. 9).

The financing behaviour of the firm is another critical variable that was correlated with the gender of the principal owner. This paper also analysed the differences in financing pattern between male and female-owned firms. The variables that were used as indicators of financing behaviour are: the services which the firm obtained from their banks, the method used to finance business growth, and the method used to finance business start-up. The results from this analysis showed that male-owned firms generally obtained more services from their banks when compared to female-owned firms. Significantly, loan services were more prevalent among male-owned firms relative to female-owned firms at a ratio of about 3 to 1. Previous research has indicated that businesses owned by females are less likely to use the services of commercial banks (Haynes, 1999). The finding from this research corroborates with those from previous works.

In relation to financing business growth and business start-up, the results show that there are indeed significant differences between male and female-owned firms. Bank loan was a significant source of funding for financing business growth for male-owned businesses while business cash flow was the most commonly used source of financing for business growth in female-owned firms. Similarly, for business start-up, female-owned firms were more likely to use their own savings as a source of financing while bank loan was highly popular among male-owned firms. The results are not surprising as previous research shows that female-owned firms are generally regarded as high risk and are also smaller, which would imply that their demand for credit is limited (Robb & Wolken, 2002). The results also suggest that female-owned firms are less likely to have long-term formal relationships with their banks, which is an indication that they do not have formal relationships in the credit market. This lack of formal relationship can have an impact on the ability of the firm to gain access to capital in the credit market (Berger & Udell, 1995).

The analysis of the data revealed that there are undeniably differences between female and male-owned firms as it relates to firm, owner characteristics, and financing behaviour. These differences have implications for practitioners, academic researchers, policymakers and regulators who are formulating policies to ensure the growth and survival of these firms. Some of these possible implications are outlined below.

IMPLICATIONS OF THE FINDINGS

This study has established a set of baseline facts about the role of gender in shaping the credit behaviour of small, locally-owned firms in the Jamaican context. There is a burgeoning literature on gender in entrepreneurship (Brush, 1992; Alder, 2004) but this literature is generally looked at in the context of a developed country. Little is known about the subject from a developing country's perspective, more so from a small, open economy perspective. Indeed, context is critical when looking at the issues of gender in entrepreneurship because laws and customs will dictate the role of gender in a society. It is for this reason that context specific research on gender and entrepreneurship is critical. It will help to validate or disprove findings from other contexts in order to better aid in building a general theory on the role of gender in entrepreneurship. This study therefore, has added a new dimension to the literature on gender and entrepreneurship. Theorists in the field can now use these baseline facts to help to build a general theory on the subject.

The results also suggest that policymakers and regulators cannot use a one-size-fits all approach to design policies for the growth and survival of these firms. The baseline facts show that male-owned firms differ from female-owned firms in a number of respects. It means that when policies are being designed to deal with issues such as offering credit, variables such as the size of the firms will have to be taken into consideration; the credit behaviour of the principal has to be looked at, among other things. Because female-owned firms are generally less likely to take up credit maybe due to their size, or the fear of being turned down; a policy that offers credit to all firms without bearing these variables in mind will not be largely attractive to female-owned firms, and as such they will not benefit from the capital needed for the growth and survival of their firms. Taking into consideration the baseline facts that are presented in this study, policymakers can design policies which fit the context of the firm and that will be most beneficial to the different types of firms.

The baseline facts which highlight the differences between male and female-owned firms can help practitioners to design better work related policies to enhance the growth of their organisations. Understanding how females manage their own firms will provide insights into the organisational form that is best suited for female versus male entrepreneurism. For example, females generally seem more comfortable with operating a firm under the structure characterised as sole proprietorship or partnership than a limited liability company. Practitioners should put policies in place that encourage women to form these types of corporations. The results also suggest that alternative means of raising financing will have to be sought to help female-owned firms to grow. They do not necessarily depend on the traditional banks for financing, so sources of financing that are in line with their risk tolerance and their credit behaviour will have to be put in place in order to provide them with access to capital for growth and survival.

CONCLUDING REMARKS

This paper presented some baseline facts on gender and entrepreneurship, specifically focusing on the credit behaviour in small, locally-owned Jamaican firms. Following a uni-variate analysis of the data, the results revealed that when compared to male-owned businesses: the principals of female-owned businesses are less educated; have fewer years of work experience; the size of the firms are smaller; the firms are also younger; the organisational form is more likely to be a sole proprietorship or partnership; they are less likely to receive a loan from a bank, and are more likely to use their own savings to finance business growth and business start-up. These findings are consistent with previous research from other jurisdictions. This is good news to theorists who want to build a general theory on gender and entrepreneurship. The novelty of the study context is what makes the results unique. Indeed, with the findings from a unique context mirroring similar results from other contexts, this provides a stronger basis on which theorists can build a general theory on entrepreneurship and gender. Policymakers will also note that male-owned and female-owned firms are not one and the same and as such; appropriate policies will have to be put in place to ensure the growth and survival of each category of firm. A one size fits all to credit programmes will not be a good policy direction to support the growth and survival of small, locally-owned Jamaican firms.

The aim of this paper was never to theorise about gender and credit behaviour in small firms in Jamaica. Given the paucity of information on the subject in the study context, the aim was to provide some baseline facts on which future works can be built. It is hoped that other researchers will use these baseline facts to derive possible areas for future research on the subject.

ACKNOWLEDGEMENTS

The authors will like to thank the Mona School of Business and Dr. Lawrence Nicholson for allowing us the use of their extensive database that they have developed on women and family-owned businesses in Jamaica to write this paper.

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Robb, A. & J. Wolken (2002). Firm, owner, and financing characteristics: Differences between female and male-owned small businesses (FEDS Working Paper No. 2002-18). Available at http://ssrn.com/abstract=306800

Sunden, A. & B. Surette (1998). Gender differences and the allocation of assets in retirement savings plans. American Economic Review 88(2), 207-211.

Verheul I. & R. Thurik (2001). Start-up Capital; Does Gender Matter? Small Business eEonomics 16: 329-346.

ENDNOTES

(1) Gender here refers to biological differences that is, the state of being male or female. For ease of reference, we do not include the social or cultural dimensions of gender.

(2) Most of the banks in Jamaica had generated a significant share of their revenue from the interest income on Government of Jamaica Bonds. The Government of Jamaica, in a bid to reduce its debt burden, has decided to reduce the interest rate on its bonds and also extend their maturity. This reduction in interest rates has reduced the income that banks made from these investments. To maintain their profit margins, the banks have to diversify their revenue streams. One area of diversification is the generation of loans from the small business sector.

(3) For a copy of the instrument used for this study, readers can contact the lead author. The length of the instrument is too bulky to be included as an appendix to this study.

Densil A. Williams, University of the West Indies, Mona

Kadamawe A.K. K'nIfe, University of the West Indies, Mona

Table 1: Relationship between Gender and Education

                  Gender of Owner

Education Level       Female        Male

Primary                 3%           5%
High School             9%          20%
College                 5%          15%
University              12%         25%

Table 1: Relationship between Gender and Education

                  Gender of Owner

Education Level       Female        Male

Other                   1%           1%
No Response             2%           2%

Table 2: Relationship between Gender and Work Experience

                          Gender of Owner

Work Experience          Female        Male

0                          3%           3%
1-5 years                  7%          12%
6-10 years                 5%          16%
More than 10 years         17%         36%
No Response                0%           1%

Table 3: Relationship between Gender and Firm Size

                                      Gender

Firm Size (Number of Employees)    Female   Male

Under 5 persons                      7%     19%
5-15 persons                        20%     23%
16-30 persons                        3%      7%
31-50 persons                        1%      7%
51-100 persons                       1%      8%
101-200 persons                      0%      1%
Over 201 persons                     0%      3%

Table 4: Relationship between Gender and Firm Age

                                    Gender

Firm Age (years in operation)    Female   Male

2-3 years                          7%      9%
4-5 years                          3%      2%
6-9 years                          7%      5%
10-19 years                        8%     17%
20 years and over                  9%     33%

Table 5: Relationship between Gender and Organisational Form

                                                    Gender

Organisational Form (legal status of the firm    Female   Male

Publicly listed on Stock Exchange                  0%      1%
Proprietorship/Partnership                        16%     28%
Registered Corporation                             7%      8%
Limited Liability                                  7%     27%
No Response                                        3%      3%

Table 6: Relationship between Gender and Services obtained from Banks

                         Gender

Services Obtained     Female   Male

Bank Loans             12%     36%
Investment products     4%      3%
Banking                17%     26%
Mortgage                0%      0%
Bill payments           0%      0%
Money transfer          0%      1%
Card services           0%      1%

Table 7: Relationship between Gender and Financing Business Growth

                        Gender

Services Obtained    Female   Male

Bank loan             11%     39%
Own savings           10%     14%
Inheritance            0%      1%
Family loan            0%      3%
Remittances            0%      1%
"Partner" pooling      0%      1%
Business cash flow    10%      6%
Other                  0%      3%

Table 8: Relationship between Gender and Financing Business Start Up

                       Gender

Services Obtained   Female   Male

Bank loan             7%     29%
Own savings          23%     30%
Inheritance           1%      7%
Family loan           0%      3%
"Partner" pooling     0%      0%
Other                 0%      0%