Public subsidies for credit support, democracy and European female-led SMEs

Purpose-The article investigates whether variety of democracy affects the probability to employ public subsidies for credit support by small- and medium-sized enterprises (SMEs) led by female entrepreneurs. Design/methodology/approach-Building on the literature on democracy and on gender differences, it leverages a large firm- and country-level dataset (SAFE) of 31 democracies in Europe (EU and non-EU) over the 2009-2014 period by using probit models and instrumental variable approaches. Findings-Results from the different econometric techniques and samples suggest that variety of democracy affects female-led SMEs in using public subsidies for credit support. The evidence is robust to endogeneity concerns. Research limitations/implications-The empirical evidence presents a time frame limitation. At the same time, SAFE is the only database that supplies information about the gender of firms and public subsidies for credit support, rendering it the only resource that allows the test of the hypothesis proposed. The article therefore offers insights for scholars to revisit our results in future studies that make use of datasets with a longer time span - when they will become available. Originality/value-To the best of the authors' knowledge, the article is the first to study the effect of democracy on female entrepreneurial behavior in the use of public subsidies for credit support.