directions of the estimates broadly align with our base results, although they are weaker in statistical significance. We believe that this difference in results may be related to the fact WBL indicators reflect the _de jure_ situation, whereas WVS and FLFP capture _de facto_ realities. In particular, the aggregated WBL index captures several dimensions of gender that are not directly related to access to credit for women-led firms.

# **4. Conclusions**

Using firm-level data for manufacturing firms in 61 countries, we show that female-managed firms are not credit constraint on the extensive margin: they are equally likely to apply for credit as their male counterparts and face lower rates of credit rejection and a higher likelihood of opening credit lines. This may be explained in part by the fact that female-managed firms are not any riskier or less productive than their male counterparts. In fact, they are more profitable in our sample of formal firms with over 5 employees, suggesting the possibility of a strong selection of more capable women as managers. However, women-managed firms receive lower levels of credit either because they apply for lower amounts or are granted less than they request. Our analysis suggests that these disparities are more pronounced in traditional countries, indicating that social norms may play a significant role. Our research also provides suggestive evidence of capital misallocation driven by gender differences in credit amounts received.

The findings of this research have important implications for policymakers and the development community more broadly.

_First_ , the results highlight the need for policy makers to prioritize gender-inclusive approaches in financing strategies. While female-managed firms do not face credit constraints on the extensive margin, they receive lower credit amounts on the intensive margin, indicating the presence of credit constraints. In fact, many financial products do not consider gender-specific constraints or risk preferences and therefore are de facto biased against women-led firms. For instance, peerto-peer lending platforms have been shown to replicate gender bias (Chen et al., 2020). Policy makers and Development Finance Institutions (DFI) can encourage financial institutions to design targeted financial products and services that specifically cater to the needs of women entrepreneurs. Innovative approaches include alternative credit scoring (Alibhai et al., 2022), insurance for shortterm loan repayment suspensions (Ubfal, 2023), and disbursing loans into digital savings accounts labeled for women’s businesses (Riley, 2024).

_Second_ , given the relatively lower sales per worker among female-led firms, compared to their productivity or profits, women entrepreneurs can specifically benefit from enhanced access to markets and technology, for instance, by encouraging them to enter male-dominated sectors through the use of role models (World Bank, 2022) and by combining access to digital marketplaces with digital marketing training (Alhorr, 2024). Policymakers can collaborate with local partners to provide such training programs, mentorship, and networking opportunities that empower women the very low variability of the entrepreneurship dimension across countries.

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