Andreas Madestam

(Stockholm University)

will give a presentation on

Credit Contracts, Business Development and Gender: Evidence from Uganda

Abstract: We examine how liquidity shortages at various stages of the loan cycle affect small firm growth and vary by entrepreneurs' gender. Providing liquidity—whether upfront for larger initial investments, early to manage costs and repayments when returns are delayed, or throughout to cushion financial shocks—can improve business outcomes, though social pressures to share funds may limit effective liquidity management. In a field experiment with a major Ugandan lender, entrepreneurs were randomly assigned to different repayment plans, varying the timing of liquidity access. Results indicate that the timing of liquidity provision is crucial: profits are significantly higher after five years when liquidity is available throughout the loan cycle, with the optimal timing depending on entrepreneur gender. By contrast, upfront liquidity shows no impact on firm outcomes. Male-owned businesses see increased hiring and higher profits when liquidity is available across the cycle, while female-owned businesses benefit more from early liquidity. We present suggestive evidence that these differences are driven by kinship taxation on female entrepreneurs.