Access to finance and rural youth entrepreneurship in Benin: Is there a gender gap?

Abstract

Rural entrepreneurship is an important employment generation intervention for the fastgrowing young labour force in developing countries. Many bottlenecks including access to finance impede rural youths to perform in their new ventures. This paper examines the impact of access to finance on rural youths' entrepreneurship in Benin using data from the second wave of the School-To-Work Transition (SWTS) survey involving over 900 youths. The paper employs the endogenous switching regression technique (ESR), combined with propensity score matching, to investigate the drivers of rural youths' access to finance and its impact on entrepreneurship intention and performance. The results indicate that age, education, poverty status, experience, working in the agricultural sector and the existence of a bank branch are important determinants of rural youths' access to finance. The results also show that access to finance increases the probability of youth's entrepreneurship by 15.2% on average. Similarly, the turnover increased by 15.86% for the youths who accessed finance. Moreover, the study shows a significant gender gap in rural entrepreneurship of 5.24% among youths that had access to finance in Benin. These results suggest that policymakers should encourage formal financial institutions to reduce their credit eligibility conditions for youths who do not have collateral.

The micro determinants of financial inclusion and financial resilience in Africa

“…However, the impact on informal credit is the greatest, confirming the predominance of the informal sector in Africa. These features of credit are also stated by Edo et al (2019) and Senou and Manda (2022), who estimated that access to the internet, experience, a strong financial system and savings drive formal transactions. A major recommendation is to prioritize innovation and expand banking branches to satisfy customers.…”

“…For instance, using the 2014 database on 37 African countries with probit estimations, Zins and Weill (2016) found that being a man, richer, more educated and older enables financial inclusion, with a higher influence of income and education. Soumaré et al (2016), Koloma (2021) and Senou and Manda (2022), focusing on Central and West Africa and using the endogenous switching regression technique, propensity score matching and logit estimations, showed that age, gender, residence area, income, education, employment, marital status, household size, having one family member with a bank account and a degree of trust in financial institutions were driving financial inclusion. However, these results differ from one country to another.…”

What drives the investment intentions of emerging economy millennials? Examining the effect of financial advertisement with the PLS-SEM

“…Secondly, the majority of studies have dwelt on older adults' financial decision-making, i.e., Arias et al ( 2022 ), Lim et al ( 2022 ) and Sunderaraman et al ( 2022 ). In contrast, some focused the gender difference in financial decision-making (Aristei and Gallo 2022 ; Wagner and Walstad 2022 ; Senou and Manda 2022 ). Some studies, like de Costa and Abd Aziz ( 2019 ) and Setiawan et al ( 2022 ), investigated millennials' financial literacy and knowledge.…”

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