Constraints faced by women small busines owners: Evidence from the data

Traditional capital structure theory contends that firms select the mix of debt and equity that minimizes their cost of caputal and maximizes the value of the firm. Prior research suggests, however, that small firsts, and particularly small women-owned firms experience difficulty in security sources of debt capital. This article explores some of the possible constraints faced by women business owners using data from the 1993 National Survey of Small Business Finances. Although results do not demonstrate evidence of non-economic discrimination against women-owned firms, they do not reveal that certain characteristics typical of many women-owned firms, including small size, limited prospects for growth and profitability, and failure to provide collateral or guarantees reduce the likelihood of obtaining debt capital. Thus, for smaller firms, capital structure may be at least partially dictated by the characteristics of the firm rather than by the choices of the owner-manager.

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