The Nordic Africa Institute – Publications

Micro, Small and Medium frms’ credit access remains a dilemma though the fnancial sector has been liberalized. This paper investigates the factors infuencing credit rationing and how variations in the characteristics of frms owned by diferent genders contribute to credit rationing. The study utilizes probit estimation with marginal efects, Fairlie counterfactual and decomposition analysis to analyze both credit rationing and the extent to which the credit rationing gap is infuenced by diferences in gender endowments and discrimination using 1,430 frms’ owners’ loan applications randomly selected from eight (8) commercial banks. Our results show that borrowers having more years of experience, external market access, proximity to lender, being older and being male are not likely to experience credit rationing. Borrowers in the agricultural sector, with long term loans, who lack formal education, run labor-intensive frms, have joint ownership, and operate small businesses face the probability of being credit rationed. A decomposition and counterfactual analysis reveal a credit rationing gap largely infuenced by discrimination favoring male owned frms rather than diferences in gender endowments. Our fndings have implications for policy.