Environmental assurance, gender, and access to finance: Evidence from SMEs

When confronting credit constraints, female-led or -owned firms may adopt environmental assurances to increase access to credit. However, this depends on how financial institutions integrate gender diversity and environmental risk into the rating phase of their credit management system. This study uses comprehensive firm-level data from small and medium-sized enterprises (SMEs) across 39 countries to uncover the relationship between environmental assurances and access to finance and to investigate whether this relationship varies by the gender composition of firms. The gender relations of firms are measured in terms of leadership and ownership. We find that environmental assurances have a significant impact on access to finance, although the impact is sensitive to the gender composition of firm leadership. While environmental assurance raises the probability of having loan applications approved for male-led firms, the opposite is true for female-led firms. In general, female ownership does not affect access to finance, regardless of environmental assurances. Collectively, the findings provide policy implications for improving the efficiency of financial markets and managerial implications for evaluating the impacts of firm-gender composition on access to finance.