These factors taken together may make small business lending unattractive to.
banks.
Women-Owned Business and Banks.
Some research has suggested that women-owned small businesses experience greater difficulties in dealing with banks.
than men-owned businesses (Brophy, 1989-1 Brush, 1992; Riding & Swift, 1990; Stoner et al., 1990). Several studies.
have also noted that women-owned businesses are less likely to use bank loans than those owned by men (Cole &.
Wolken, 1995; Coleman & Carsky, 1996; Scherr et al., 1993).
At least three different theories have been put forth to explain why women entrepreneurs may use less debt than men.
First, some researchers contend that there may be adverse discrimination in the lending process placing women at a.
disadvantage (Brophy, 1989; Brush, 1992; Neider, 1987; Riding & Swift, 1990; Scherr et al., 1993). According to this.
view, women are either unfairly denied credit or discouraged in the credit application process with the end result that.
they are less likely to obtain loans. addition, women may not network as effectively as men (Aldrich, 1989; Brush,.
1992). Thus, they may not have the same access to sources of information and capital.
Others contend that women are more risk averse than men and thus less likely to take on debt (Brown & Segal, 1989;.
Chaganti, 1986; Collerett & Aubry, 1990; Olsen & Currie, 1992; Scherr et al., 1993). According to this hypothesis,.
women avoid debt and are reluctant to put up the collateral that may be required to obtain a loan (Carter & Cannon,.
1992).
A third theory contends that women-owned businesses use less debt because they don't need it. Women-owned firms.
tend to be smaller and more heavily concentrated in service lines of business (Chaganti, 1986; Kallenberg & Leicht,.
1991; Loscocco & Robinson, 1991). Because they are small, they may be able to finance their needs using the personal.
financial resources of the business owner.
