Conventional or alternative financing to promote entrepreneurship? An analysis of female and male entrepreneurship in developed and developing countries

Abstract

One of the main concerns of entrepreneurs is obtaining finance to launch their projects. In this sense, this study aims to analyse the relationship between entrepreneurship and different sources of finance, considering the type of entrepreneurship, gender, and the country. To achieve this purpose, entrepreneurship has been distinguished by gender and type of entrepreneurship (necessity and opportunity entrepreneurship), using data from the Global Entrepreneurship Monitor (GEM) as a reference. Sources of finance were divided into conventional (bank) financing and alternative financing (microfinance and cooperatives). Countries were divided into developed and developing countries according to the classification proposed by the International Monetary Fund (IMF). We worked with 66 countries (17 developed and 49 developing) for which information was obtained for 2007–2019. Using fixed effect panel data models, the results show how microfinance and cooperativism have a positive impact, especially on female entrepreneurship by opportunity in developing countries. In the case of cooperativism, there is a direct and clear relationship between female entrepreneurship, regardless of whether driven by necessity or opportunity, and region. Conventional financing is generally unfavourable to female entrepreneurship but favours male opportunity entrepreneurship. This paper makes recommendations to authorities to create an appropriate framework to encourage these sources of finance for entrepreneurship, given their particular positive impact and benefit in developing regions.