7.2 Women Entrepreneurs and Financial Literacy
2 MIN READ
There is still a significant gender gap when it comes to financial literacy in Canada1 — studies confirm that women generally don’t do as well as men in terms of financial knowledge and confidence.2 This can have major consequences on the success of women-owned businesses.
Women's financial knowledge
Research suggests that women entrepreneurs typically do not do as well on financial literacy tests.3 According to a Scotiabank report, women are 56% more likely than men to have low financial knowledge.4Consequences of low financial knowledge:5
- Challenges during the start-up phase
- Ineffective business practices
- Poor financial decisions
Women's financial confidence
Women entrepreneurs also tend to have a lower financial confidence level. According to the same Scotiabank report, only 45% of women say they feel financially confident, as opposed to 58% of men.6
Consequences of low financial confidence:7
- Fear of failure
- Less motivated to start a business
- Less inclined to make external financing requests
- Limited access to capital
- Slower business growth
Financial literacy levels and their significance, according to a Scotiabank report8
- Business owners have good financial knowledge and confidence.
- More likely to make external financing requests.
- Optimal level that entrepreneurs should aim for.
- Business owners who are overconfident, meaning that they think that they have the knowledge to financially manage a business, actually do not have all the knowledge they should.
- Will not hesitate to apply for financing, even from expensive sources that could jeopardize the future viability of their business.
- Rarely seek the advice of professionals when making business decisions.
- Business owners who lack confidence, meaning they have the financial knowledge to manage a business, are actually not confident enough.
- These entrepreneurs are more reluctant to apply for financing.
- They tend to seek out the advice of professionnals when making business decisions.
- Business owners have low levels of financial knowledge and confidence.
- Less likely to be successful entrepreneurs.
- Less likely to apply for financing.
As seen in the Scotiabank report, there is a pressing need to increase women entrepreneurs’ level of financial confidence and knowledge. While knowledge can be increased (see Tool 7.1), confidence is more difficult to change as it depends on the entrepreneur’s personal perceptions. Tools 7.3 and 7.4 provide a number of potential solutions to help women become more confident entrepreneurs.
Download & Print Tool
References
1Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 2-3.
2Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 2-3.
3Marie Drolet (March 2016). Insights on Canadian Society: Gender differences in the financial knowledge of Canadians, Statistics Canada, https://www150.statcan.gc.ca/n1/pub/75-006-x/2016001/article/14464-eng.htm (page consulted January 24th 2021).; Organisation for Economic Cooperation and Development (October 2016). OECD/INFE International Survey of Adult Financial Literacy Competencies, http://www.oecd.org/finance/oecd-infe-survey-adult-financial-literacy-competencies.htm (page consulted January 25th 2021).; Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 2.; Lisa Xu and Zia Bilal (2012). Financial Literacy around the World: An Overview of the Evidence with Practical Suggestions for the Way Forward, Policy Research Working Paper no. WPS 6107, Washington, DC: World Bank Development Research Group.
4Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 3, 10.
5Sanjib Chowdhury, Megan Lee Endres and Crissie Frye (2019). "The influence of knowledge, experience and education on gender disparity in entrepreneurial self-efficacy", Journal of Small Business & Entrepreneurship, vol. 31, n° 5, p. 371-389.; Jill Kickul, Fiona Wilson, Deborah Marlino and Saulo Dubard Barbosa (2008). "Are misalignments of perceptions and self-efficacy causing gender gaps in entrepreneurial intentions among our nation’s teens? ", Journal of Small Business and Enterprise Development, vol. 15, n° 2, p. 321-335.; Barbara Orser, Marzena Cedzynski and Roland Thomas (Mars 2007). "Modelling owner experience: Linking theory and practice", Journal of Small Business & Entrepreneurship, 20(4): 387-408.; Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 2, 6.; Fiona Wilson, Jill Kickul and Deborah Marlino (2007). "Gender, entrepreneurial self-efficacy and entrepreneurial career intentions: Implications for entrepreneurship education", Entrepreneurship Theory and Practice, vol. 31, n° 3, p. 387-406.; Women Entrepreneurship Knowledge Hub (2020). The State of Women’s Entrepreneurship in Canada 2020, Toronto, Diversity Institute, Toronto Metropolitan University, p. 34.
6Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 15.
7Business Development Bank of Canada (December 2017). Financial literacy among Canadian entrepreneurs and business owners, Joint project: BDC Research and Market Intelligence, and the Telfer School of Business at the University of Ottawa, https://www.bdc.ca/en/documents/analysis_research/financial-literacy-among-canadian-entrepreneurs-business-owners.pdf (page consulted December 22nd 2020), p. 38.; Philipp Koellinger, Maria Minniti and Christian Schade (2013). "Gender differences in entrepreneurial propensity", Oxford Bulletin of Economics and Statistics, vol. 75, n° 2, p. 213-234.; OCDE (2016). Women Entrepreneurship Key Findings: Canada, http://www.oecd.org/sdd/business-stats/EaGCanada-Eng.pdf (page consulted November 23rd 2020).; Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 2.; Women Entrepreneurship Knowledge Hub (2020). The State of Women’s Entrepreneurship in Canada 2020, Toronto, Diversity Institute, Toronto Metropolitan University, p. 34.
8Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 16-17.
2Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 2-3.
3Marie Drolet (March 2016). Insights on Canadian Society: Gender differences in the financial knowledge of Canadians, Statistics Canada, https://www150.statcan.gc.ca/n1/pub/75-006-x/2016001/article/14464-eng.htm (page consulted January 24th 2021).; Organisation for Economic Cooperation and Development (October 2016). OECD/INFE International Survey of Adult Financial Literacy Competencies, http://www.oecd.org/finance/oecd-infe-survey-adult-financial-literacy-competencies.htm (page consulted January 25th 2021).; Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 2.; Lisa Xu and Zia Bilal (2012). Financial Literacy around the World: An Overview of the Evidence with Practical Suggestions for the Way Forward, Policy Research Working Paper no. WPS 6107, Washington, DC: World Bank Development Research Group.
4Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 3, 10.
5Sanjib Chowdhury, Megan Lee Endres and Crissie Frye (2019). "The influence of knowledge, experience and education on gender disparity in entrepreneurial self-efficacy", Journal of Small Business & Entrepreneurship, vol. 31, n° 5, p. 371-389.; Jill Kickul, Fiona Wilson, Deborah Marlino and Saulo Dubard Barbosa (2008). "Are misalignments of perceptions and self-efficacy causing gender gaps in entrepreneurial intentions among our nation’s teens? ", Journal of Small Business and Enterprise Development, vol. 15, n° 2, p. 321-335.; Barbara Orser, Marzena Cedzynski and Roland Thomas (Mars 2007). "Modelling owner experience: Linking theory and practice", Journal of Small Business & Entrepreneurship, 20(4): 387-408.; Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 2, 6.; Fiona Wilson, Jill Kickul and Deborah Marlino (2007). "Gender, entrepreneurial self-efficacy and entrepreneurial career intentions: Implications for entrepreneurship education", Entrepreneurship Theory and Practice, vol. 31, n° 3, p. 387-406.; Women Entrepreneurship Knowledge Hub (2020). The State of Women’s Entrepreneurship in Canada 2020, Toronto, Diversity Institute, Toronto Metropolitan University, p. 34.
6Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 15.
7Business Development Bank of Canada (December 2017). Financial literacy among Canadian entrepreneurs and business owners, Joint project: BDC Research and Market Intelligence, and the Telfer School of Business at the University of Ottawa, https://www.bdc.ca/en/documents/analysis_research/financial-literacy-among-canadian-entrepreneurs-business-owners.pdf (page consulted December 22nd 2020), p. 38.; Philipp Koellinger, Maria Minniti and Christian Schade (2013). "Gender differences in entrepreneurial propensity", Oxford Bulletin of Economics and Statistics, vol. 75, n° 2, p. 213-234.; OCDE (2016). Women Entrepreneurship Key Findings: Canada, http://www.oecd.org/sdd/business-stats/EaGCanada-Eng.pdf (page consulted November 23rd 2020).; Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 2.; Women Entrepreneurship Knowledge Hub (2020). The State of Women’s Entrepreneurship in Canada 2020, Toronto, Diversity Institute, Toronto Metropolitan University, p. 34.
8Scotiabank Women Initiative (2020). Financial Knowledge & Financial Confidence: Closing Gender Gaps in Financing Canadian Small Businesses, p. 16-17.
Disclaimer
All documents prepared for the LEADING LENDERS project were developed in line with the most appropriate and recent terminology. However, we recognize that terminology is subject to change over time. To the best of our ability, we have attempted to use terminology that respects the dignity and rights of all individuals.
All documents prepared for the LEADING LENDERS project were developed in line with the most appropriate and recent terminology. However, we recognize that terminology is subject to change over time. To the best of our ability, we have attempted to use terminology that respects the dignity and rights of all individuals.
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