Journal of Small Business & Entrepreneurship

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Factors hindering women entrepreneurs’ access to

institutional finance- an empirical study

Protap Kumar Ghosh, Sutap Kumar Ghosh & Sabrin Chowdhury

To cite this article: Protap Kumar Ghosh, Sutap Kumar Ghosh & Sabrin Chowdhury (2017):
Factors hindering women entrepreneurs’ access to institutional finance- an empirical study, Journal
of Small Business & Entrepreneurship, DOI: 10.1080/08276331.2017.1388952

To link to this article: http://dx.doi.org/10.1080/08276331.2017.1388952

Published online: 16 Nov 2017.

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 Journal of Small Business & Entrepreneurship, 2017
https://doi.org/10.1080/08276331.2017.1388952

Factors hindering women entrepreneurs’ access to institutional

finance- an empirical study
Protap Kumar Ghosha*, Sutap Kumar Ghoshb and Sabrin Chowdhurya
a
Business Administration Discipline, Khulna University, Khulna, Bangladesh; bFinance and
Banking Department, Islamic University, Bangladesh
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(Received 22 June 2016; accepted 3 October 2017)

This study has been designed to reveal the issues that are unfavorable to both women
entrepreneurs as well as financial institutions and lessen fund flow from financial
institutions to women entrepreneurs. Both qualitative and quantitative approaches
have been used here. Responses from women entrepreneurs have been quantified by
using four point likert scale and data have been collected through face-to-face
interview. This study has revealed that collateral dispute and lengthy process,
suspiciousness, preconception and conservative attitude of the employees and
complicacy in loan processing limit women entrepreneurs’ access to institutional
finance. Whereas, collateral dispute with women entrepreneurs, high operating cost,
misuse of disbursed loan, lack of business experience and proper documents and
difficulty in assessing creditworthiness of the women entrepreneurs demotivate
financial institutions to supply fund to women entrepreneurs. The findings of this
study will facilitate Bangladesh and other developing countries (having same nature)
to set appropriate policies to enhance fund flow to women entrepreneurs with a view
to encouraging women entrepreneurship and ensuring economic progress and women
empowerment.
Keywords: women entrepreneurs; financial institutions; financing; factor analysis

Cette
etude a
et
e conçue pour mettre en lumiere les
el
ements qui sont d
efavorables aux
femmes entrepreneurs et aux institutions financieres, et qui limitent les flux financiers
qui circulent de ces m^emes institutions vers l’entrepreneuriat f
eminin. Des approches
a la fois qualitatives et quantitatives ont
et
e utilis
ees. Les r
eponses des femmes
entrepreneurs ont
et
e quantifi
ees a l’aide de l’
echelle de Likert a 4 choix et les
donn
ees ont
et
e collect
ees au cours d’entretiens en face a face. Cette
etude a r
ev
el
e
que les litiges collat
eraux et les processus longs, la m
efiance, les id
ees pr
econçues et
les attitudes conservatrices des employ
es, ainsi que la complexit
e du traitement des
pr^ets, limitent l’acces des femmes entrepreneurs a la finance institutionnelle. Alors
que les litiges collat
eraux avec les femmes entrepreneurs, les co^ uts d’exploitation

elev
es, la mauvaise utilisation des pr^ets vers
es, le manque d’exp
erience des affaires et
de documents ad
equats, et la difficult
e a
evaluer la solvabilit
e des femmes
entrepreneurs d
ecouragent les institutions financieres de fournir des fonds a ces
femmes. Les r
esultats de cette
etude vont faciliter l’adoption, par le Bangladesh et par
d’autres pays en d
eveloppement (de m^eme nature), de politiques ad
equates pour
renforcer les flux de financements destin
es aux femmes entrepreneurs, en vue
d’encourager l’entrepreneuriat f
eminin, de m^eme que d’assurer le progres

economique et l’autonomisation des femmes.
Mots cl
es: femmes entrepreneurs; institutions financieres; financements; analyse
factorielle

*Corresponding author. E-mail: pkghosh1982@gmail.com

Ó 2017 Journal of the Canadian Council for Small Business and Entrepreneurship/Conseil de la PME et de l’entrepreneuriat
 2 P. K. Ghosh et al.

1. Introduction
Women empowerment through their economic solvency has become burning issues
throughout the world nowadays. To enhance the economic freedom of women, women
entrepreneurship has been used as a very effective and popular tool in different developed
and developing countries. Women are half of the total global population as well but the
number of their participation in business is not significant due to various factors such as
economic, social, and political in both developing and developed countries. Among all of
these issues, access to finance is considered as a basic obstacle for women entrepreneur-
ship development (Stengel 2013). Women entrepreneurs have fewer access to bank credit
opportunities than that of male entrepreneurs for various reasons i.e., lack of collateral,
inability to present trustworthy guarantor and negative perceptions of female entrepre-
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neurs by loan officers of commercial banks (Veena, Venakatachalam and Joshi 2012).
Sometimes, the women entrepreneurs do not meet banks’ formalities required for loans.
It is found that recovery of loan becomes a big problem if the loan is issued to these kinds
of small and medium enterprises (Magoulios, Giorgos and Kydros 2011). Women entre-
preneurs of all categories of activities have claimed that they could not expand their busi-
ness mainly due to deficiency of finance from financial institutions. Most of them who
ask for commercial banks’ loan are not getting their required amount of loan (Richardson,
Howarth and Finnegan 2004). Das (2000) concluded that more than 50 percent of the
women entrepreneurs used their own capital or depended on their spouse or family mem-
bers to start their business. That is, a majority of the females relies on family funding or
personal savings (Halkias et al. 2011). GPFI (2011) carried out a study on “Strengthening
Access to Finance for Women-Owned SMEs in Developing Countries” and revealed that
women entrepreneurs had lower access to finance than that of male entrepreneurs from
financial institutions. It was also found that access to finance of women were limited by
various obstacles like the legal and regulatory environment, the quality of available infra-
structure, individuality of the entrepreneurs, management training, constraints within
financial institutions, lack of credit bureaus or lack of sufficient collateral (Magoulios and
Kydros 2011; Heatly and Silverstein 1994 and Maria 2015). Due to non-availability of
easy access to capital, women entrepreneurs find difficulties to expand their businesses
(Itani, Sidani, and Baalbaki 2011). Women entrepreneurs pointed out that financing the
enterprise was their major problem. Women could obtain less financial capital to develop
their new business (Alsos, Isaksen, and Ljunggren 2006). In Italy, it was found that gen-
der status, age, banking history, level of education and nature of industry to some extent
affects entrepreneurs’ access to credit (Cesaroni and Sentuti 2016). Women entrepreneurs
face more difficulties than that of male entrepreneurs in financing their business through
institutional credits (Cesaroni et al. 2013; Stefani and Vacca 2013).
Mayoux (2001) exposed that women frequently were affected from gender bias in the
socio-economic environment in which they operate. They had to face different social, cul-
tural, educational, and technological challenges and face difficulties in acquiring eco-
nomic resources than male entrepreneurs. UDEC (2002) concluded that women were less
likely to have own land or premises, and hence, they had lack of the necessary collateral
required by financial institutions, predominantly banks. Nwosu et al. (2015) exposed that
woman entrepreneurs in small and medium-sized enterprise (SMEs) in Nigeria were mar-
ginalized in formal credit markets as compared to their male entrepreneurs. Chijoriga
(2000) also mentioned that most of the financial institutions provided group based loan to
women entrepreneur because of less knowledge and understanding of how to approach
bank loans as well as little awareness of the requirements of the banks. Women’s access
 Journal of Small Business & Entrepreneurship 3

to financial resources are also limited by biased lending practices when financial institu-
tions consider them smaller, less experienced, and therefore less attractive clients than
male. Women entrepreneurs have limited access to skills and technology; financial
resources and services; and market information and business services; mainly backward
and forward linkage opportunities (Makena, Kubaison, and Njati 2014). Zororo (2011)
concluded that the greatest problem facing women entrepreneurs was access to finance
due to the requirements of adequate collateral. In Kenya, very few women have their own
property and it creates difficulties to provide collateral against bank loan. According to
Mwobobia (2012), some women entrepreneurs in Kenya face difficulties to obtain loans,
as they have to show credit records. Moreover, they do not fully understand the require-
ments of getting and paying loans and have to face gender discrimination in loan dis-
bursement. At the time of providing loan, they have to face various problems i.e., lack of
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experience in respective business, lack of technological knowledge, insufficient collat-

eral, small size of the firm, unskilled to use loan, and poor managerial skill. Identifying
the right purpose of SME loan and right entrepreneur are also big problems for bank
employees (Langowitz and Minniti 2007). Although women entrepreneurs face different
barriers to collect fund form various financial institutions, it is found that in some cases
women herself are reluctant to apply for institutional fianc
e and sometimes do not want to
expand their business (McCracken et al. 2015).

1.1. Women entrepreneurship in Bangladesh

Bangladesh is one of the fast growing developing countries in the world. Half of the peo-
ple in this country are women. Nevertheless, their direct participation into entrepreneur-
ship is not satisfactory. Government of Bangladesh, Central bank, Private sectors, NGO’s
and development partners are working together to promote women entrepreneurship in
Bangladesh (Yunus et al. 2014). In Bangladesh, starting a new business and its expansion
or just continuing existing business, women entrepreneurs have to face various problem
like gender specific constrains, access to finance and financial institutions, lack of aware-
ness of facilities and support services, lack of institutional supported facilities, lack of
social capital, etc. (Jahed, Kulsum, and Akhtar 2011). Sometimes women’s participation
in business as entrepreneurs is not so much welcomed (Ahmed 2014). To ensure smooth
and balanced economic growth across the country and to promote female entrepreneurs,
Bangladesh bank (Central bank of Bangladesh) has initiated various financing facilities
for medium and small entrepreneurs and has declared supportive measures so that women
can easily avail financial assistance from banks at a lower cost. Still now, women entre-
preneurship does not reach up to that mark (Yunus et al, 2014). The Commercial banks
provide a low level of financial assistance to women entrepreneurs that could fulfill their
partial needs (Nawaz, 2012).
The commercial banks in Bangladesh are providing SME loans to those entrepreneurs
that are involved in businesses like embroidery, boutique, parlor, hotel and restaurant,
poultry, dairy farm, and agro-industry etc. and sometimes provide various supportive
services to women entrepreneurs like collateral-free loans, financing at reduced interest
rate, easy access to loan, and Guarantor free loan (Morshed 2008). In Bangladesh, institu-
tional lending practices have been built in such a way that women entrepreneurs do not
get adequate easy access to finance (Nawaz 2012). Bank officials have found that lack of
collateral, lack of training, loan recover problem and use of loan for other purposes are
the main problems to select women entrepreneurs for financing (Rahman et al. 2013).
Many women entrepreneurs in Bangladesh face various problems like lack of capital,
 4 P. K. Ghosh et al.

insufficient experience, unavailability of raw materials, lack of marketing opportunities,

difficulties in sourcing skilled workers, challenges of account keeping, delay in loan proc-
essing, freedom of movement, male dominated social structure, harassment of law enforc-
ing agency, non-cooperation of the whole sellers, and so on, which have been hampering
the smooth running of their business (Chowdhury 2011). Parvin, Jinrong, and Rahman
(2012) identified a set of problems for the women entrepreneurs in Bangladesh. Out of
which, an inadequate starting capital, lack of collateral, lack of information on domestic
and international market, quick installment payment process, lack of evidence of credit
worthiness also affect women entrepreneur to get financial assistance from financial insti-
tutions. Several critical factors like insufficient collateral, lack of education, low manage-
rial skill, improper documents, and complicated loan issuing procedure prevent banks
from straightforward and flexible issuance of loan to women entrepreneurs (Rahman et
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al. 2013). A great number of women reported that bank officials ignored them in meetings
and preferred speaking to their husbands or male business partners. Most of the bank offi-
cials claim that women entrepreneurs do not have a clear knowledge about the procedure
of taking loan from banks and make the terms and conditions of lending process more
critical (Nawaz 2012). Moreover, women entrepreneurs do not get their enterprises regis-
tered with any legal authorities. Consequently, it creates problem for women entrepre-
neurs to get financial assistance from commercial banks. Because of the inadequate
business plan, inappropriate cash flow, small size of firm, small size of initial capital,
bank officials have to be more concerned about whether women entrepreneur will con-
tinue the business or not. Sometimes bank officials claim that women entrepreneurs mis-
use the disbursed loan and eventually, they become unable to repay the loan in time
(Shamim 2008). The utilization patterns of loan, monitoring measures of banks, commu-
nication gap between the financial institution and entrepreneurs, terms and lending proce-
dures hamper women entrepreneur to get loan from financial institutions (Yunus et al.
2014). Unfortunately, share of women in total SME loan disbursement by banks is less
than 4 percent compared to 96 percent of male entrepreneurs (Rahman et al. 2013). Kha-
tun (2014) conducted a study on 129 women entrepreneurs in Dhaka divisions, Bangla-
desh, and concluded that lengthy lending procedures, collateral/mortgage issue were big
problem and bankers were less cooperative and treat women entrepreneurs as weak client.
Therefore, our review of past literature denotes that although some social, cultural, legal
issues slower women entrepreneurship across the world, access to institutional finance is
one of the most crucial obstacles for women entrepreneurship development.
Although women comprise half of the total population in Bangladesh, Majority of
them remain detached from the income generating activities. Without their active partici-
pation in the development process, sustainable changes in the economic structure of the
country are not possible. This study has been designed to find those factors that limit
women’s access to institutional finance in Bangladesh. More specifically, we want to
identify the core factors that hinder women entrepreneurs to get finance from financial
institutions as well as limit financial institutions to provide financial assistance to women
entrepreneurs so that these factors can be minimized for women entrepreneurship devel-
opment in Bangladesh as well as in other developing countries.

2. Methodology
This study is an empirical study based on primary data. In order to achieving our research
objective both quantitative and qualitative approaches have been used here. This study is
divided into two parts. In the first part, data from women entrepreneurs have been
 Journal of Small Business & Entrepreneurship 5

collected and analyzed based on quantitative approach to detect the factors that hinders
them to collect funds from commercial banks. In the second part, qualitative approach
has been used to find factors that limit commercial bank officials to grant loan to the
women entrepreneurs.
To collect primary data from women entrepreneurs, a structured questionnaire was
designed and face-to-face interviews were conducted as well. In designing structured
questionnaire, intensive literature review and an initial pilot survey on 15 women entre-
preneurs were conducted. Five demographic variables (i.e., age, marital status, year of
business, type of business, education level), one variable to represent the real financial
needs of the women entrepreneurs and 15 close-ended variables to detect factors that hin-
der women entrepreneurs’ access to institutional finance were included in the question-
naire. To quantify the opinion of the women entrepreneurs’, a four point likert scale has
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been used for the last fifteen variables ranging from 1 D strongly disagree, 2 D disagree,
3 D agree, 4 D strongly agree. We intentionally excluded any neutral point in order to
having direct opinion on each variable from the respondents. Hundred women entrepre-
neurs from different parts of the country have been selected for our data collection. Dur-
ing sample collection process, we have divided the whole country into four segments,
i.e., southeast, southwest, northeast and northwest and from the each segment, 25 respond-
ents are selected conveniently to ensure representation form each part of the country. A
series of face-to-face interviews have been conducted with the selected women entrepre-
neurs. To analyze our collected data, descriptive statistical tools (i.e., mean, standard
deviation) have been used first to show the relative importance of the variables. Then fac-
tor analysis has been done to find the core factors that limit women entrepreneurs’ access
to institutional finance. The variables having loading 0.500 in rotated component matrix
are integrated into the factors. We have decided to use loading below 0.70 because some
of the variables, that are ranked first, second and third in table-2, have loading below 0.70
in the rotated component matrix. Before factor analysis, reliability test and Kaiser-
Meyer-Olkin (KMO) measure of Sampling Adequacy and Bartlett’s Test of Sphericity
have been conducted to test our data set. Finally, to represent relative importance of our
constructed factors, descriptive statistic ‘mean score’ has been used.
The second part is mainly based on qualitative approach where a series of intensive
face-to-face interviews have been conducted to collect data from 40 credit officers of var-
ious commercial banks across the country to detect factors that limit commercial banks to
provide credit facilities to women entrepreneurs. Ten respondents from each regional seg-
ment are selected and a series of audio records along with written notes are taken during
interview. The collected audio data have been converted into text and after critical evalu-
ation and coding; some unique factors have been developed to describe how those factors
limit commercial banks to supply financial assistance to women entrepreneurs. Finally,
outcomes form first and second parts have been presented trough a diagram.

3. Findings of the study

In this part of the report, demographic profile of the respondent and their financial need
have been described first. Ranking of the variables that hinder women entrepreneurs’
access to institutional finance has been made based on its mean score. Then factor analy-
sis has been done to construct the core factors that hinder women entrepreneurs’ access to
institutional finance. Finally, the issues that limit employees of the financial institutions
to supply financial assistance to women entrepreneurs have been disclosed.
 6 P. K. Ghosh et al.

3.1. Findings from women entrepreneurs

3.1.1. Demographic profile and financial needs
Table 1 represents the demographic profile of the respondents. We gathered demographic
information in order to detecting whether their financial needs differ in accordance with
their demographic features by testing chi-square (x2). However, our findings have
revealed that 60% of the total respondents have strongly agreed and 40% of the total
respondents have agreed with statement ‘financial need is their core problem to expand
their business.’ No respondent has disagreed and strongly disagreed with the statement.
This finding has revealed that more or less women entrepreneurs had been suffering from
financial needs.
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3.1.2. Ranking of the variables

Table 2 represents the ranking of the variables that hinder women entrepreneurs’ access to
institutional finance based on its respective mean score. This ranking has been done to
represent how severely each variable hinder women entrepreneurs’ access to institutional
finance. Where the variable ‘Ask for business experience’ has highest mean score and first
position. This variable represents that bankers are very much serious about the business
experience of the women entrepreneurs. Then ‘Tendency not to pay small loan’ has sec-
ond position, which indicates that bankers were less willing to meet the financial need of
the women entrepreneurs as their business are generally small. The variable ‘Demand for

Table 1. Demographic profile of the respondents.

Name of the variable Class Frequency (%)

Age Up to 25 years 12
25 to 35 years 47
35 to 45 years 28
45 to 55 years 10
Above 55 years 3
Education level Below SSC 18
SSC 33
HSC 36
Graduate 11
Post graduate 2
Type of business Manufacturing 31
Service 24
Trading 41
Agro business 4
Year of establishment Below 5 years 29
5 to 10 years 41
10 to15 years 20
Above 15 years 10
Marital status Unmarried 24
Married 65
Divorce 8
Widow 3
 Journal of Small Business & Entrepreneurship 7

Table 2. Ranking of the variables hindering access to institutional finance.

Frequency distribution (%)

Std.
Rank Name of the variables Mean deviation SA A D SD

1 Ask for business experience 3.6500 .51981 67 31 2 0

2 Tendency not to pay small loan 3.6200 .56461 66 30 4 0
3 Demand for excess collateral 3.5700 .57305 61 35 4 0
4 Lengthy loan disbursement process 3.5300 .57656 57 39 4 0
5 Demand high managerial skill 3.5200 .57700 56 40 4 0
6 Require business related legal documents 3.5100 .64346 59 33 8 0
7 Traditional attitude of bank in assessing risk 3.4900 .57726 53 43 4 0
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8 Demand for the evidence of credit worthiness 3.4700 .54039 49 49 2 0

9 High interest rate and service charge 3.4500 .60927 51 43 6 0
10 Gender discrimination to loan disbursement 3.4200 .66939 52 38 10 0
11 Require adequate initial capital 3.4000 .66667 50 40 10 0
12 Charge early high installment 3.3800 .67838 49 40 11 0
13 Biasness in selecting type of business 3.3500 .77035 53 29 18 0
14 Very much selective for guarantor 3.1200 .62410 26 60 14 0
15 Complicated terms and conditions for loan 2.9500 .68718 21 53 26 0

excess collateral’ has third position. In this way, other variables are ranked based on its
respective mean score. The variables ‘Complicated term and condition’ has been ranked
last which indicates that women entrepreneurs are less bothered for term and condition of
the loan. Frequency distribution of each variable has been given also with a view to giv-
ing an idea of detail response of the women entrepreneurs.

3.1.3. Factor analysis

Table 3 denotes that the value of KMO measure of sampling adequacy is 0.615 which
indicates that our numbers of variables are adequate (as value is more than 0.500) to run
factor analysis. The chi-square value of Bartlett’s Test of Sphericity is 326.902 and the
resulting P-value is 0.000, which denotes multivariate normality of our distributions, that
is, our collected data set will not construct an identity matrix.
The rotated component matrix in Table 4 represents that all of our variables are com-
prised into five components. Both component-1 and compoment-2 have comprised three
variables whereas components-3, component-4 and component-5 have included four,
three and two variables, respectively. The naming and ranking of these components
(based on mean score) have been done in Table 5. While naming these components, the
importance of each variable based on ranking in Table 2 has also been considered.

Table 3. KMO and Bartlett’s test.

Kaiser-Meyer-Olkin measure of sampling adequacy. .615
Bartlett’s test of sphericity Approx. chi-square 326.902
Df 105
Sig. .000
 8 P. K. Ghosh et al.

Table 4. Rotated component matrixa.

Name of the variables Component

1 2 3 4 5

Gender discrimination to loan disbursement .796 .074 .095 .047 .161

Require adequate initial capital .754 ¡.039 ¡.185 ¡.100 .087
Biasness in selecting type of business .707 .421 .060 .107 .076
Charge early high installment .388 .740 .166 -.042 ¡.026
Traditional attitude of bank in assessing risk ¡.045 .740 .098 ¡.079 .049
Complicated terms and conditions for loan .050 .603 ¡.219 .231 ¡.072
Demand high managerial skill ¡.091 .106 .760 ¡.047 .071
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Tendency not to pay small loan .042 .081 .598 ¡.107 ¡.102
Demand for the evidence of credit worthiness .385 ¡.247 .596 .151 ¡.211
High interest rate and service charge ¡.258 ¡.146 .564 .442 .067
Very much selective for guarantor .547 .086 .009 .709 ¡.088
Require business related legal document .077 ¡.126 ¡.116 .564 .527
Ask for business experience ¡.399 .371 ¡.005 .561 .014
Lengthy loan disbursement process .160 .201 .092 ¡.191 .797
Demand for excess collateral .053 ¡.121 ¡.123 .149 .649

Notes: Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.
a
Rotation converged in 8 iterations.
Bold values in the table are used to construct one factor in table 5.

Table 5. Ranking and naming of the constructed factors.

Rank Name of the component Component Mean Std. deviation

1 Collateral dispute and lengthy process Com-5 3.5500 .45227

2 Conservation attitude Com-3 3.5150 .37406
3 Suspiciousness Com-4 3.4267 .41596
4 Preconception Com-1 3.3900 .56667
5 Complicacy Com-2 3.2733 .47704

The component-5 has been ranked first based on its mean score and the name of this
component is given as ‘Collateral dispute and length process.’ The women entrepreneurs
have claimed that they face collateral disagreement and unnecessary delay in loan dis-
bursement. Financial institutions also have acknowledged this issue. The factor
‘Conservative attitude’ has been ranked second and the reason behind giving this name is
that the variables integrated into this factor in rotated component matrix come from con-
servative attitude. The component four in the rotated component matrix has been named
‘Suspiciousness’ as well as ranked third out of five. We have named this component
‘Suspiciousness’ because of the financial institutions’ extra consciousness for business
related formal documents, business experience, and guarantors. The component one has
been named ‘Preconception’ and ranked four. We have named this components
‘Preconception’ because the elements of this factor in the rotated component matrix
denote presumption about types of business and borrowers. Finally, the factor
‘Complicacy’ (name of component two) has been ranked five and it denotes that although
 Journal of Small Business & Entrepreneurship 9

women entrepreneurs has acknowledged it as their hindering factor, this factor is less
severe to them than other factors. That is, terms and condition and payment method of the
loan are unfavorable to them; these variables are less constraining than that of other.

3.2. Findings from financial institutions

While conducting face-to-face interview with the personnel of financial institutions, the
answers from the respondents to some extent became saturated. We could find some com-
mon factors that demotivate them to supply fund to the women entrepreneurs.

3.2.1. Collateral dispute and creditworthiness

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Thirty-one out of forty respondents directly or indirect have tried to mention collateral
disputes between women entrepreneurs and financial institute. They have mentioned that
most of the time, women cannot show trust worthy security and guarantee for their loan
because of having most of the ownership of the assets by male citizen. Sometimes it
becomes very difficult to measure their creditworthiness. One of the respondents of
Southwest zone directly claimed as, “… most of the time the ownership of the premises
on which the women entrepreneur start their business don’t belong to them…”. Another
one from Northwest zone added, “…The ownership of most of the family property belongs
to male family members. So, it becomes very difficult for us to assess their creditworthi-
ness to secure our loan…”.

3.2.2. High operating cost

Most of the bank officials have argued that most of the women entrepreneurs’ loan
demand is very small in size. Therefore, the loan processing cost and monitoring cost is
relatively high which ultimately increases the operating cost of the banks. A private com-
mercial bank official directly from Northwest zone blamed as, “…Most of the women
entrepreneurs apply for small size loan. But, private commercial bank is profit oriented
organization and always search for big and creditworthy clients rather than small size
clients. So, small size loan is financially feasible for them because of comparatively high
operating cost…”.

3.2.3. Misuse of disbursed loan

Almost twenty credit officials have argued that there is a chance of misuse of the dis-
bursed loan by the women entrepreneurs because of the influences of their family mem-
bers. They claimed that in Bangladesh female are dominated by the male family member.
Few of them also claimed that although loan is disbursed in the name of the women, there
might be a chance using this loan by the male of that family. Third respondent form
Southeast zone said, “…Although the business is started in the name of the women to
have loan at lower interest rate, ultimately the male relation of the women operates it…”.
Seventh respondent form Southwest zone also added, “…sometimes business is operated
by the women but they have little control on it because of their family control…”.

3.2.4. Lack of proper document

Sometimes women entrepreneurs cannot show officially accepted documents (i.e., income
tax payment statement, trade license, trustworthy documents of their turnover etc.) that
 10 P. K. Ghosh et al.

are essential to the financial institutions for loan disbursement. Most of the new and exist-
ing women are low educated and inefficient in formal documentation of their business
activities. One bank official dissatisfiedly claimed, “…It is much unexpected that a great
number of women entrepreneurs are not serious or don’t know how to record business
operation formally. So, whenever they apply for loan, can you tell me how it is possible to
assess whether they deserve the loan and what amount eventually they deserve…”.

3.2.5. Lack of business experience

Financial institutions want to assess the managerial capability of the women entrepre-
neurs by considering their business experience so that financial institution can make it
sure that borrowers have adequate capability to pay back the loan amount along with
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interest from their operating cash flows. However, it becomes very difficult for inadequate
documentation by the women entrepreneurs. One of the bank officials from Northwest
zone stated, “…We cannot offer loan to a nonprofessional. We need to assess their oper-
ating efficiency to ensure payback of principle loan amount along with interest in due
time. But, this process become very difficult for the new entrepreneurs and sometime for
the women who are already in the business because of adequate information…”.

3.3. Factors lessening fund flow to women entrepreneurs

The following diagram represents complete findings of our study regarding factors hin-
dering women entrepreneurs’ access to institutional finance. Where we see both lenders
and borrowers have claimed that some issues lessening fund flow from financial institu-
tion to women entrepreneurs. If you critically evaluate these issues, you will see the issues
of both parties are closely related. Both parties have acknowledged collateral disputes in
loan disbursement process. Suspiciousness is closely related with misuse of disbursed

Collateral disputes & length process

Conservation attitude
Suspiciousness
Preconception
Complicacy
Unfavorable issues to women entrepreneurs

Financial Women
Institution Fund flow Entrepreneurs

Unfavorable issues of financial institution

Collateral dispute
High operating cost
Misuse of disbursed loan
Lack of proper documents
Lack of business experience
Difficulty to assess creditworthiness
 Journal of Small Business & Entrepreneurship 11

loan and incapability to pay back principle loan amount along with interest because of
less business experience.
The components of the factor ‘conservative attitude’ are also directly or indirectly a
matter of concern to the financial institutions. The women entrepreneurs have claimed
that ‘Preconception’ relating to types of business and gender status hampers fund flow to
them from financial institutions. The factor ‘complicacy’ has been ranked last by the
women entrepreneurs, which means, loan related term and conditions are less hindering
than other four factors and the women entrepreneurs become familiar with it. Although
there is a refinance facility exits from Central Bank of Bangladesh for financing women
entrepreneurs, all the above issues demotivate financial institutions supplying fund to
women entrepreneurs.
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4. Conclusion
Bangladesh is one of the fast growing developing countries passing her transitional
period. With a view to increasing balanced economic development and women empower-
ment in Bangladesh, Governments and central bank have been trying to enhance women
entrepreneurship across the country. To facilitate women entrepreneurship in Bangladesh,
Bangladesh Bank as representative of Bangladesh Governments has been trying to
increase fund flow to women entrepreneurs. However, the actual fund flow to them cannot
reach desired level although Bangladesh bank has introduced refinance facilities for the
financial institutions. With a view to facilitate smooth fund flow to women entrepreneurs,
this study has been designed to reveal those issues that disfavor smooth fund flow to the
women entrepreneurs. Both qualitative and quantitative approaches have been used to
analyze and present our findings. Finally, we have revealed some issues that are unfavor-
able to both women entrepreneurs and financial institutions. We have found that collateral
disputes and lengthy loan disbursement process, conservative attitude, suspiciousness and
preconception of the financial institution, and complicacy in loan processing are core
problems for the women entrepreneurs to adopt financial assistance from the financial
institutions. Whereas collateral disagreement, high operating cost, possibility of misuse
of disbursed loan, lack of proper documents and business experience, and difficulties in
assessing creditworthiness demotivate financial institution to supply fund to the women
entrepreneurs. We confidently conclude that if these issues cannot be resolved effectively
by central bank, fund flow to the women entrepreneurs will not reach its desired level.

Disclosure statement
No potential conflict of interest was reported by the authors.

Notes on Contributors
Protap Kumar Ghosh is a full-time faculty, Business Administration Discipline, Khulna University,
Bangladesh.

Sutap Kumar Ghosh is a full-time faculty, Finance and Banking Department, Islamic University,
Bangladesh.

Sabrin Chowdhury is a student at Business Administration Discipline, Khulna University,

Bangladesh.
 12 P. K. Ghosh et al.

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