Blended finance programs combine public and private funds to ease access to credit for underserved firm segments. While these programs have become widespread in many emerging markets, evidence on their impact remains lacking. We match credit registry data with firm-level tax records to analyze a typical blended finance program for female entrepreneurs in Turkey. Our synthetic difference-in-differences results reveal a 22% average increase in the share of credit allocated to women by participating banks, a sustained effect driven by higher lending to existing, poached, and first-time female borrowers. Beneficiary firms, especially those with higher capital productivity, experienced increased investment, sales, profits, and supplier diversification, as well as lower exit rates. Our results offer new empirical insights into the mechanisms driving effective financial inclusion policies.

We study the effect of racial minority bank ownership on minority credit access. Using new linked data on bank ownership, loan officers, and minority borrowers, we present four main findings. First, minority-owned banks specialize in same-race mortgage lending. Almost 70 percent of their mortgages go to borrowers of bank owners’ same race. Second, the effect of minority bank ownership on minority credit is large and exceeds that of minority loan officers. We find that minority borrowers applying for mortgages in banks whose owners are of the same minority group are nine percentage points more likely to be approved than otherwise identical minority borrowers in non-minority banks. This effect is over six times that of a minority loan officer. Third, evidence from plausibly exogenous bank collapses suggests that the effect of minority bank ownership might reflect an expansion rather than a reallocation of credit to minorities. Fourth, the default rate of minority banks’ same-race borrowers is much lower than that of otherwise-identical borrowers of other races. These findings are consistent with minority bank ownership reducing information asymmetry and inconsistent with owners’ preferences driving the observed effects on minority credit access.

We use the universe of loans made in five regions of Southern Peru to show that first-time borrowers have higher probability of receiving a loan and with better conditions from the bank where their families are more central. The evidence we have found suggests that banks, particularly those catering the informal sector, may provide initial loans to family members of their existing clients as a means of retaining their current clientele.