Unleashing Female Entrepreneurship: The Impact of Blended Finance Programs

Entrepreneurship knows no gender, but the challenges faced by female entrepreneurs are often daunting. These challenges include, but are not limited to, biased loan officers, restrictive gender norms, discriminatory legal arrangements, and limited access to financial resources. These hurdles impede the growth and productivity of businesses run by women, leading to missed economic opportunities and social disparities.

In response, blended finance programs have emerged as a powerful tool to promote female entrepreneurship. These programs combine public and private funding, technical assistance, and risk-sharing mechanisms to create a more equitable financial landscape. This article delves into the Women in Business (WIB) program in Türkiye, shedding light on the effectiveness of blended finance programs in fostering female entrepreneurship.

The Women in Business (WIB) Program: A Case Study

Launched in 2014 and running until 2019, the WIB program targeted five Turkish banks to increase their lending to women-run small businesses. This comprehensive program consisted of three key components:

1. Public Credit Lines: The program provided €300 million in credit lines to participating banks, boosting their capacity to lend to female entrepreneurs.

2. Risk Mitigation Mechanism: A first-loss risk cover (FLRC) was established, guaranteeing up to 10% of each participating bank’s portfolio. This mechanism mitigated the risk associated with lending to female entrepreneurs, encouraging banks to expand their lending to this underserved segment.

3. Technical Assistance: Tailored consultancy packages were offered to the banks, empowering them with the knowledge and skills necessary to serve female entrepreneurs effectively. These packages included training on gender-responsive sales, online training for loan officers, and support in developing new financial products and procedures tailored to women entrepreneurs.

Impact of the WIB Program: A Resounding Success

The WIB program had a significant impact on the participating banks’ lending to female entrepreneurs, leading to several positive outcomes:

1. Increased Lending to Female Entrepreneurs: Participating banks increased the share of their small business loans allocated to female-run firms by an average of 2 percentage points, representing a substantial increase of 22%. This surge in lending demonstrates the program’s effectiveness in shifting banks’ lending priorities toward female entrepreneurs.

2. Durable Effects: The program’s positive effects were not short-lived. Treatment effects settled at a higher steady state for each of the participating banks, indicating that the program’s impact was sustained over time. This durability highlights the program’s success in creating a lasting change in banks’ lending practices.

3. Crowding-In Effect: The program not only expanded credit to existing female borrowers but also attracted new female borrowers who had previously been unable to access bank loans. This crowding-in effect suggests that the program successfully reached underserved female entrepreneurs, expanding access to finance for those who needed it most.

4. Preservation of Credit Quality: Blended finance programs often raise concerns about compromising credit quality. However, the WIB program demonstrated that expanding credit to female entrepreneurs does not lead to a decline in credit quality. Female first-time borrowers who received loans from participating banks were no more likely to default or leave their bank than those who borrowed from control banks. This finding underscores the program’s success in mitigating risk while promoting female entrepreneurship.

Impact on Female-Run Businesses: A Catalyst for Growth

The increased access to finance provided by the WIB program had a transformative impact on female-run businesses:

1. Increased Investment: A 10% increase in bank credit supply to a female entrepreneur due to the WIB program resulted in a 1.3% increase in investment. This finding highlights the critical role of access to finance in fueling investment and growth in female-run businesses.

2. Increased Sales and Profits: Firms increased their sales and profits by an average of 1.3% and 8.2%, respectively, due to the positive credit shock. These increases in sales and profits underscore the direct impact of access to finance on the financial performance of female-run businesses.

3. Improved Business Survival: Beneficiary firms were 2.4 percentage points more likely to remain in business one year after the program’s start. This demonstrates the program’s long-term impact on business sustainability, highlighting its role in fostering a more vibrant and resilient female entrepreneurship ecosystem.

Conclusion: Blended Finance Programs as a Catalyst for Change

The WIB program in Türkiye provides compelling evidence that blended finance programs can be an effective tool in promoting female entrepreneurship. The program successfully motivated and enabled banks to lend more to underserved female entrepreneurs, leading to increased investment, sales, profits, and business survival rates among female-run firms.

The analysis suggests that a combination of liquidity support, comprehensive training, and risk-sharing mechanisms can effectively address the challenges faced by female entrepreneurs in accessing finance. Blended finance programs can play a crucial role in creating a more inclusive financial landscape and unlocking the economic potential of women entrepreneurs worldwide.


Call to Action: If you’re passionate about supporting female entrepreneurship, consider getting involved in blended finance programs or advocating for policies that promote access to finance for women. Join the movement to create a more equitable financial landscape and empower women entrepreneurs to drive economic growth and prosperity.