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Finance, gender, and entrepreneurship in India — study findings highlighted by national media


In a new WIDER Working Paper Finance, gender, and entrepreneurship — India’s informal sector firms, researchers Ira N. Gang, Rajesh Raj Natarajan, and Kunal Sen find strong evidence of the crucial role played by financial access in promoting entrepreneurship among firms in the informal sector in India. In particular, the work examined gender differences in access and whether they affect the success in expanding family firms into entrepreneurial firms that hire outside the family.

Published in November 2020, the research findings have been featured in Open, a weekly current affairs and features magazine in India.

The highlighted findings include that that lack of access to finance hurts the expansion of firms in India’s informal sector, and that gender does not affect the success of transforming family firms into entrepreneurial firms, with men and women performing equally well once they have gained access to funds.

‘Our results imply that financial inclusion matters to both women and men entrepreneurs,’ Professor Gang, based at Rutgers University and one of the co-authors, told Open. ‘Our results are less conclusive when trying to sort out whether the set of policies followed differentially encouraged entrepreneurship among women versus men.’

The article also brings to fore the policy implications raised by the working paper. While the policy reform initiated in the 2000s by the Indian government to increase access to finance in under-banked districts has contributed to the growth of entrepreneurship in the informal sector, India continues to face problems related to a large informal sector mostly populated by micro-household enterprises that remain largely unproductive.

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