TY - JOUR AU - Fafchamps, Marcel AU - McKenzie, David AU - Quinn, Simon R AU - Woodruff, Christopher TI - When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana JF - National Bureau of Economic Research Working Paper Series VL - No. 17207 PY - 2011 Y2 - July 2011 DO - 10.3386/w17207 UR - http://www.nber.org/papers/w17207 L1 - http://www.nber.org/papers/w17207.pdf N1 - Author contact info: Marcel Fafchamps Freeman Spogli Institute Stanford University 616 Serra Street Stanford, CA 94305 Tel: 650/497-4602 E-Mail: fafchamp@stanford.edu David McKenzie The World Bank, MSN MC3-307 1818 H Street N.W. Washington, DC 20433 Tel: 202-458-9332 E-Mail: dmckenzie@worldbank.org Simon Quinn Department of Economics Oxford University UK E-Mail: simon.quinn@economics.ox.ac.uk Christopher Woodruff Queen Elizabeth House University of Oxford OX1 3TB UK E-Mail: christopher.woodruff@qeh.ox.ac.uk AB - Standard models of investment predict that credit-constrained firms should grow rapidly when given additional capital, and that how this capital is provided should not affect decisions to invest in the business or consume the capital. We randomly gave cash and in-kind grants to male- and female-owned microenterprises in urban Ghana. Our findings cast doubt on the ability of capital alone to stimulate the growth of female microenterprises. First, while the average treatment effects of the in-kind grants are large and positive for both males and females, the gain in profits is almost zero for women with initial profits below the median, suggesting that capital alone is not enough to grow subsistence enterprises owned by women. Second, for women we strongly reject equality of the cash and in-kind grants; only in-kind grants lead to growth in business profits. The results for men also suggest a lower impact of cash, but differences between cash and in-kind grants are less robust. The difference in the effects of cash and in-kind grants is associated more with a lack of self-control than with external pressure. As a result, the manner in which funding is provided affects microenterprise growth. ER -