Evidence from Bangladesh
This note explores a surprising trend in SME lending in Bangladesh: a reverse gender gap in access to finance. Using administrative data from BRAC Bank, the research finds that women-owned businesses (WSMEs) receive more favorable loan terms than male-owned firms—including larger loan amounts, longer repayment periods, and lower interest rates. These favorable terms persist even after controlling for business performance and other firm characteristics, suggesting that targeted policies and institutional support may be effectively improving access for WSMEs.
Despite these advantages, WSMEs remain underrepresented in the formal loan market, comprising only a small fraction of applicants. This is consistent with national survey data showing low formalization rates among women-owned firms.
The findings imply that the main barrier for WSMEs in Bangladesh is not access to finance per se, but rather the transition from informal to formal business status. The note calls for further research into the drivers of formalization and the broader impact of loans on firm performance.
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