Is There a Gender Bias in Deal Making? Evidence From Firm-Level Cross-Country Analysis

Women in developing countries are less likely to be entrepreneurs than men. In contrast to the previous literature on the determinants of female entrepreneurship, which looks at the role of imperfections in factor and product markets, this paper examines whether an important constraint on women starting a business is the time it takes to obtain a construction permit or operating licence, as compared to men. Using the insights of the deals and development framework, we suggest that 'de facto' deals between state and businesses, rather than 'de jure' rules, characterise the relationship that firm owners and managers have with the state. We argue that such deals are likely to be gender biased – the nature of such bias can, however, be in either direction and can differ across countries/regions too. Our analysis, based on recent rounds of World Enterprise Survey data, reveals that for most of the countries, though there is no significant difference between male- and female-owned firms in the average times taken to obtain relevant business documents, for a number of countries, the kernel densities reveal significant variation. Our econometric estimation of approximately 80 countries, however, clearly indicates gender bias of deals but the direction of bias, as a whole, is in favour of females – firms with a significant percentage of female ownership tend to require fewer days to obtain both operating licences and construction permits. Further analysis reflects distinctive patterns, based on different regions, in obtaining business-related deals