Gender discrimination, social networks and access to informal finance of Vietnamese small and medium enterprises

The issue of gender discrimination in the informal credit market is under-investigated given that existing studies largely consider formal bank loans. Using a rich dataset on access to informal loans and loan terms of Vietnamese privately-owned manufacturing small and medium enterprises over 2005-2015, this paper finds that female-run firms have a lower propensity to borrow and incur a higher cost of borrowing from informal sources than male-run counterparts. The empirical evidence on gender discrimination is robust to the control of different firm characteristics, firm-specific unobserved heterogeneity, and selection bias. With the potential to mitigate gender discrimination, extended social networks are found to work in favor of female-run firms.