Financial crisis and female entrepreneurship: Evidence from South Korea

• Main Authors: LEE, Jungho, MYONG, Sunha
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Asian Studies; Entrepreneurial and Small Business Operations; Finance; Industrial Organization
• Online Access: https://ink.library.smu.edu.sg/soe_research/2651; https://ink.library.smu.edu.sg/context/soe_research/article/3650/viewcontent/female_entrepreneurship_revised_paper.pdf
• Institution: Singapore Management University

We document a drastic increase in female-owned manufacturing firms in South Korea after the 1997 financial crisis. During the crisis, a major banking sector reform was conducted, and many underperforming bank branches were forced to close down. Using a geographical variation of bank branch closures during the reform, we show that the banking sector reform resulted in a rise in female entrepreneurship. We present evidence that male-owned firms were preferred by the closeddown bank branches, despite female-owned firms exhibiting lower risks and higher returns. The banking sector reform, although not explicitly aimed at addressing gender disparities, substantially benefited female entrepreneurs by improving efficiency in the financial market.