Despite the emphasis placed bymicrofinance organizations on lending to female businessowners, evidence from three recent randomized controlledtrials has cast doubt on the ability of capital alone togrow female-operated microenterprises: in my own previousexperiment in Sri Lanka women given grants saw no increasein business profits, while the recent randomized trials ofmicrofinance in the Philippines and India also see verylittle in the way of profit increases when women get loans.One possible interpretation is that female-ownedmicroenterprises in these countries are already operating attheir efficient level of capital, which might be very lowespecially in countries where other labor market options forwomen are limited. However, an alternative explanation couldbe that the small scale of many female-owned firms is notefficient, but arises instead from a lack of separation ofbusiness and household accounts, and from inefficiencies inthe way people allocate assets between them. Theseinefficiencies might arise from self-control problems,leading owners to not undertake profitable investments, orfrom external pressure to share with others.
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