[En] Bank of Italy Central Credit Register provides information on the whole Italian micro enterprises population having loans with the Italian banking system. By these data we investigate if female owned firms are discriminated or not in accessing the credit market in Italy. [It] La Centrale dei Rischi di Banca d'Italia fornisce informazioni sull’intera popolazione di ditte individuali aventi debiti con il sistema bancario italiano. Utilizzando questi dati si è studiato se le aziende con proprietario donna sono discriminate o meno nell’accesso al mercato del credito. [Fr] La Centrale des Risques de la Banque d'Italie fournit des informations sur l'entière population des entreprises individuelles ayant des dettes avec le système bancaire italien. Par ces données on a étudié si les entreprises avec une femme comme propriétaire sont discriminées ou non relativement à l'accès au marché du crédit.Small Business Credit; Lending Discrimination

Daniele Coin

Maurizio Romeo

English

Research Papers in Economics

 
 
 
 
 
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Woman Entrepreneurs and the Credit Market in Italy 
D. Coin, M. Romeo 
 
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  daniele.coin@gmail.com  ESeC
 
ORIGINAL ARTICLE  
 
Woman Entrepreneurs and the Credit Market in Italy 
Il mercato del credito e le donne imprenditrici in Italia 
Les femmes chefs d'entreprise et le marché du crédit en Italie 
 
Daniele Coin  •  Maurizio Romeo 
 
 
 
 
 
© ESeC 2008   -   Accepted: July 22, 2008   -   Published online: July 24, 2008 
 
 
Abstract. Bank of Italy Central Credit 
Register provides information on the 
whole Italian micro enterprises 
population having loans with the 
Italian banking system. By these data 
we investigate if female owned firms 
are discriminated or not in accessing 
the credit market in Italy. 
 
 
Abstract. La Centrale dei Rischi di 
Banca d'Italia fornisce informazioni 
sull’intera popolazione di ditte individuali 
aventi debiti con il sistema bancario 
italiano. 
Utilizzando questi dati si è studiato se 
le aziende con proprietario donna sono 
discriminate o meno nell’accesso al 
mercato del credito. 
Abstract. La Centrale des Risques 
de la Banque d'Italie fournit des 
informations sur l'entière population 
des entreprises individuelles ayant 
des dettes avec le système bancaire 
italien. Par ces données on a étudié 
si les entreprises avec une femme 
comme propriétaire sont 
discriminées ou non relativement à 
l'accès au marché du crédit. 
 
Keywords: Small Business Credit; Lending Discrimination. 
 
JELclassification: G21, J71. 
 
1. Introduction 
Micro enterprises owned by women make up a 
growing share of Western economies.  
However some recent studies found that women- and 
minorities- owned business face barriers to access to 
the credit market (see Blanchard, Zhao and Yinger, 
2008).  
This phenomenon was investigated especially in North 
America and in developing countries (see Blanchard, 
Zhao and Yinger, 2008; Riding and Swift, 1990; 
Buvinic and Berger, 1990; Baydas, Meyer and 
Aguilera-Alfred, 1994; on the contrary there is a lack 
of such analysis focusing on European countries’ 
situation.  
It is well known that the areas mentioned above are 
characterized by significant sociologic differences, so 
the evidence found in one area might not be valid in 
another one. 
By this assumption research interests emerge; in this 
paper we investigate whether female owned firms are 
discriminated in accessing the credit market in Italy. 
We employ data from Bank of Italy Central Credit 
Register, which provides information on the whole 
Italian micro enterprises population receiving loans by 
the Italian banking system.  
2. Methodological Approach and Applications 
The dataset consists in 390,183 firms that have 
active loans on December 31
th, 2007. 
For each of this micro enterprises we possess 
information about the sex of the owner (SEX), 
whether it is a bad payer (BAD), the geographical 
area where the firm is situated (GEO) and finally the 
sector of economic activity (SEC). In Table 1 we 
present summary statistics. 
Many authors claim that interest rates have little 
flexibility and therefore this is not the right 
phenomenon to analyze when looking for 
discrimination (Peterson, 1981; Duca and Rosenthal, 
1994). Moreover, if prejudice is a key factor in denial 
rates, a logical consequence is that particular groups 
are forced to meet higher standards to access credit 
market, then the default rates ought to be lower 
among discriminated borrowers (Becker, 1957). 
Many authors focused on default rates to investigate 
discrimination phenomenon (see Van Order et 
al.,1993; and Berkovec et al., 1994). 
Considering that we do not possess information 
about approval or denial decision (every firm listed in 
Bank of Italy Central Credit Register has already 
obtained one ore more loans), we decided to study 
the default rates.  
The methodology we adopt is the multidimensional 
logit model with bad debts as response variable and 
the others as covariates, in symbol 
ln⎝ ⎛ ⎠ ⎞ p*
1-p*  = B0 + B1jSEX + B2jGEO + B3jSEC,   [1]  
 
8    D. Coin, M. Romeo 
 ESeC 
where p* is the expected probability of BAD=1, while 
Bij is the coefficient associated with the j-th 
determination of the i-th variable. 
In particular we are interested in the value assumed 
by Bij. In fact, let ^ Bij denote the estimated Bij. It is well 
known that the quantity exp  () ^ Bij represents the 
multiplicative influence in the odds ⎝ ⎛ ⎠ ⎞ p*
1-p*  when the i-
th variable assumes the j-th determination compared 
with the case where the i-th variable assumes the 
determination taken as base in the estimation 
process. 
After estimating the parameters of [1] using glm 
procedure in R 2.6.1
1 environment, we found that all 
the covariates result significant (p value < 2.2e
-16) for a 
step wise test. 
Considering in more details the resulting estimation it 
emerges that the less risky firms are farms 
(estimated coefficient -0.987618) situated in the 
north east (-0.751526) while the most risky are 
communication (0.187245) or textile (0.132768) 
company operating in the south of Italy (0.716244).  
Regarding gender, the estimated coefficient 
associated with the male owners was -0.091749; 
this means they are 8.8% less risky than the female 
ones. 
 
Table 1. Italian micro enterprises population having 
loans with the Italian banks (%) 
BAD PAYER  F  M 
False  13,02% 52,13%
True  7,48% 27,36%
GEO  
Center  5,64% 18,41%
Islands  2,31% 8,65%
North East  4,35% 19,47%
North West  4,92% 19,63%
South  3,28% 13,33%
SEC  
Chemistry  0,08% 0,32%
Communication  0,03% 0,10%
Construction  0,52% 14,34%
Electric_Supply  0,15% 0,97%
Energy  0,02% 0,16%
Farming  2,12% 10,05%
Food  0,68% 1,90%
Gum_Plastic  0,11% 0,35%
Machinery  0,07% 0,80%
Manufacturing  0,42% 2,89%
Mining  0,15% 1,12%
Office_Supply  0,07% 0,45%
Other_Services  4,19% 11,43%
Publishing  0,18% 0,58%
Textile  1,52% 1,92%
Tourism_Services  1,94% 3,55%
Trade_Services  7,61% 21,03%
Transportation  0,64% 7,54%
Source: Bank of Italy Central Credit Register 
3. Discussion and Conclusion 
The results obtained by this analysis are quite 
surprising, in fact it seems that female-owned firms 
are, not only not discriminated, but facilitated in 
access credit.  
This conclusion is however objectionable, in fact  the 
higher propensity to default emerged in female-owned 
companies is probably due to other kinds of 
discriminations.  
Difficulties that female entrepreneurs have to face 
every day in accessing different markets that are still 
male- dominated. 
To definitely clarify whether female entrepreneurs are 
really discriminated or it is only rhetoric, further 
analysis investigating the approval / denial process 
will be necessary. A dedicated survey seems to be the 
only way. In fact this kind of data are not stored in any 
public register such as that of  the Bank of Italy. 
 
References 
M. M. Baydas, R. L. Meyer and N. Aguilera-Alfred 
(1994), Discrimination Against Women in Formal 
Credit Markets: Reality or Rhetoric?, World 
Development, 22 (7): 1073-1082. 
G. S. Becker (1957), The Economics of Discrimination 
Chicago, University of Chicago Press. 
J. A. Berkovec, G. B. Canner, S. A. Gabriel and T.H. 
Hannan (1994), Race, Redlining, and Residential 
Mortgage loan Performance, The Journal of Real 
Estate Finance and Economics, 9 (3): 263-294. 
L. Blanchard, B. Zhao and J. Yinger (2008), Do 
Lenders Discriminate Against Minority and Woman 
Entrepreneurs?, Journal of Urban Economics, 63: 
467–497. 
M. Buvinic and M. Berger (1990), Sex Differences in 
Access to a Small Enterprise Development Fund in 
Peru, World Development, 22 (18): 695-705. 
J. V. Duca and S. S. Rosenthal (1993), Borrowing 
Constraints, Household Debt, and Racial 
Discrimination in Loan Markets, Journal of Financial 
Intermediation, 3: 77-103.  
R. L. Peterson (1981), An Investigation of Sex 
Discrimination in Commercial Banks' Direct 
Consumer Lending, The Bell Journal of Economics, 
12 (2): 547-561. 
A. L. Riding and C. S. Swift (1990), Women Business 
Owners and Terms of Credit: Some Empirical 
Findings of The Canadian Experience, Journal of 
Business Venturing 5: 327-340. 
R. Van Order, A. M. Westin, P. Zorn (1993), Effects of 
Racial Composition of Neighborhoods on Defaults, 
and Implication in Mortgage Markets, Allied Social 
Science Associations Meetings in Anaheim, CA. 
 
1  R is a language and environment for statistical computing and 
graphics. R is available as Free Software. [Online] available: 
www.r-project.org  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Via Matteotti, 15/A - 20090 Assago (MI) Italy 
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An Investigation of Sex Discrimination in Commercial Banks'

Borrowing Constraints, Household Debt, and Racial Discrimination in Loan Markets,

Discrimination Against Women in Formal Credit Markets: Reality or Rhetoric?, World Development,

Do Lenders Discriminate Against Minority and Woman Entrepreneurs?,

Race, Redlining, and Residential Mortgage loan Performance,

Sex Differences in Access to a Small Enterprise Development Fund in Peru, World Development,

Women Business Owners and Terms of Credit: Some Empirical Findings of The Canadian Experience,

Woman Entrepreneurs and the Credit Market in Italy

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Woman Entrepreneurs and the Credit Market in Italy

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