RAISING FINANCE FROM BANKS: A COMPARATIVE STUDY OF THE EXPERIENCES OF MALE AND FEMALE BUSINESS OWNERS
Lauren H. Read
Department of Geography
University of Southampton
(+44) 703 592215
(+44) 703 593295
Although raising finance is one of the greatest challenges facing all small business owners, research suggests that it is a particular problem for female entrepreneurs. Many businesswomen in the UK feel that they receive unequal treatment and face discrimination when dealing with the banks. However, these findings have been based largely on the strength of anecdotal evidence. To date there has been no attempt to investigate fully the issues of financing and small women-owned businesses, nor to examine critically claims that the banks treat their female business customers differently to their male ones. This study explores the experiences of 20 matched pairs of female and male entrepreneurs in the UK with regard to their experiences of dealing with the banks, how they use their banks, attitudes towards their own bank and banks in general, problems experienced and ways in which they deal with problems relating to their banks.
The study is based on quantitative and qualitative data collected during face-to-face interviews with 20 matched pairs of male and female business owners. A sample of female entrepreneurs was selected at random from small business directories covering Hampshire. Having interviewed the female entrepreneurs, male-owned businesses, matched for business age, size (employees), product/service and type of premises (home/business premises), were selected as a comparison group. The justification for a matched pairs approach is that many factors other than gender may explain observed differences between the experiences of male and female entrepreneurs. Thus, in order to identify gender-based differences and to explore allegations of discrimination against female entrepreneurs by the banks, a 'control' group of similar male respondents must be included in the study so that other explanatory factors can be held constant.
The findings indicate that there are more similarities than differences between male and female entrepreneurs in their use of banking facilities and experiences of dealing with banks. The majority of both male and female respondents rated their overall experiences with their bank and the quality of service provided as very good or fairly good. Their attitudes towards bank charges were also similar, with most considering them to be just satisfactory or fairly poor. There was also a high degree of similarity in terms of the problems that male and female business owners experienced with their bank. Nevertheless, 20% of women business owners did feel that they had experienced unfair or discriminatory treatment from their bank because of their gender.
Two differences were identified. First, male small business owners were rather more likely than female small business owners to make a specific response to their banking- related problems. The most common response was to complain, but whereas the men did not regard this as a new approach, the majority of women did regard this as a different approach to that which they had taken in the past, noting that they had become more forceful in standing up to their bank and demanding improvements in the quality of service. Second, a higher proportion of women entrepreneurs had asked the bank for advice on running their business (40% compared with only 15% of men). However, neither the female nor the male business owners used their banks as a source of advice on a frequent basis and the majority of both male and female entrepreneurs were of the same opinion that the banks do not understand small business.
The results suggest that, contradictory to the findings of many existing studies and anecdotal evidence, there are more similarities than differences between female and male entrepreneurs in their use and experiences of banks. However, a higher proportion of women use their bank for business advice. Moreover, a significant number of women feel that they have experienced unfair treatment and discrimination by their bank because of their gender. Both findings have implications for the banks who are eager to win the growing client base of women-owned businesses and who, as part of equal opportunities initiatives, are having to be seen to consider the needs of businesswomen in a more pronounced and recognizable way. This study has indicated the need for banks to review their small firms policies as they are failing to create an environment in which they are seen by small business, regardless of sex of ownership, as a source of advice, support and assistance.
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