Female leadership, institutions and financing constraints: evidence from Euro Mediterranean firms
Sania Ashraf, Areej Aftab SiddiquiPurpose
This study aims to investigate how female corporate leadership affects financing constraints among firms in the Euro Mediterranean region and examines whether institutional quality and gender equality moderate these relationships.
Design/methodology/approach
We use World Bank Enterprise Survey data for 8,347 firms in 23 Euro Mediterranean and neighboring economies during 2006–2024 and estimate logit models with country clustered standard errors. Female leadership is measured through two distinct dimensions: (1) female top manager, defined as a woman holding the chief executive officer or highest executive position, and (2) female majority owner, defined as women holding more than 50% of firm equity. Financing constraints are captured through self-reported obstacles to access to finance. Institutional quality, proxied by rule of law and regulatory quality, and gender equality indices act as moderators.
Findings
Female top managers and female majority owners are associated with significantly lower probabilities of reporting binding financing constraints. The marginal effects indicate that firms with female top managers experience a 3.2 to 4.5 percentage point reduction in the probability of reporting financing constraints as a major obstacle, while female majority ownership reduces this probability by 2.8–3.9 percentage points, representing economically meaningful effects given the baseline constraint rate of approximately 28% in the sample. These effects are stronger in countries with higher institutional quality and better gender equality and for small and medium-sized enterprises than for large firms. Results are robust to alternative definitions of financing constraints, sector splits, country exclusions and instrumental variable specifications.
Practical implications
The magnitude of effects suggests that banks and investors in the Euro Mediterranean region should treat female leadership as a positive governance signal that reduces information asymmetry. Policymakers can enhance access to finance for female-led firms by strengthening legal institutions and gender equality frameworks. The findings support broader agendas on financial inclusion and sustainable development.
Originality/value
This paper provides the first Euro Mediterranean wide evidence on the impact of female corporate leadership on financing constraints within an explicit institutional and gender equality framework, following recent work on gender, governance and access to finance.