Gender-credit constraints on sectorial firm performance in Nigeria: An empirical analysis using PSM approach

Abstract

This study examines how gender-related credit limits influence the performance of firms in Nigeria's manufacturing, retail, and other service sectors. The primary objective is to assess how challenges in accessing credit, which are affected by gender, impact firm productivity and investment behavior. Methodology: Utilizing data from the 2014 Nigerian Enterprise Survey, which includes responses from 2,676 Micro, Small, and Medium Enterprises (MSMEs), the study employs a robust propensity score matching (PSM) technique. The analysis indicates that male-headed firms generally have better access to credit and tend to perform slightly better across the sectors analyzed. Specifically, in the manufacturing sector, firms facing female credit constraints exhibited lower average output and capital utilization compared to their male counterparts, although these differences were not always statistically significant. Similar trends were observed in the retail and other service sectors, where female-led firms with credit constraints consistently underperformed relative to male-led firms with better credit access. Implications: The findings underscore the importance of addressing gender bias in access to finance to promote equitable economic growth and reduce poverty in Nigeria. Policy measures should focus on developing gender-sensitive microfinance services, adopting innovative lending approaches such as cash-flow-based credit assessments, enhancing financial literacy, and implementing regulatory reforms aimed at closing the credit gap between genders.