Perceived Financial Barriers and the Start-up Decision An Econometric Analysis of Gender Differences Using GEM Data

Although accessing finance is key to the foundation of any business, particular concerns have been expressed about the ability of UK women-owned firms to obtain external failure. In this article we use an econometric approach to explore the effect of perceptions of financial barriers to start-up on the start-up decision itself. Our analysis is based on the Global Entrepreneurship Monitor (GEM) UK 2004 database. Standardizing for a range of individual characteristics, we find that women are around 7.4% more likely to perceive financial barriers to business start-up than men. As perceptions of financial barriers are linked negatively to the start-up decision, stronger perceptions of financial barriers among women are having a disproportionate effect on women's start-up decision, not linked to financial barriers. Policy responses, therefore, need to take into account the demand-side with the aim of countering the more negative perceptions of star-up finance among potential women enterpreneurs. Mentoring and confidence-building programmes are obvious possibilities. We also find support for the value of university and college-based work experience programmes.