Directed Lending and Female Entrepreneurs: Micro Evidence from Turkey

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We combine microdata from the Turkish credit registry with administrative tax records on firms to trace the impacts of a large-scale directed lending program for female entrepreneurs across the whole of Turkey. We first show that participating banks durably increase lending to women – both in absolute terms and relative to male entrepreneurs. These banks lend more to their pre-existing female borrowers, poach new clients from other banks, and grant more loans to first-time borrowers. Compared with a matched control group, treated female entrepreneurs significantly grow their operations and are five percentage points less likely to default within three years after the start of the program. These program impacts are not spatially uniform. Instead, banks use the program strategically to increase market shares in districts where they lag their competitors.