External Financing and Employment in Cultural sector: A Case Study of Handicrafts in Iran

Employment needs new entrepreneurship and investments, which can be fulfilled by the financial sector. Since job creation has a critical role in developing countries, it is essential to identify the activities that can provide stable employment based on micro-funds. Labor-intensive and capital-saving technologies are the most outstanding components of the cultural sector, especially handicrafts. Thus, the cultural sector has great potentials for job creation, and its rapid growth in recent decades has made policymakers highly regard this sector. At both national and provincial levels, this paper examines the relationship between external financing and women entrepreneurship with regard to cultural employment. The research benefits from the data about the loans granted by 6575 Melli banks in Iran to finance handicraft activities in 28 provinces during 2005-2014. The results show that employment in the cultural sector has been positively and significantly influenced by external financing. Also, estimations reveal that regional investments and economic growth cannot increase cultural employment, which may be caused by a bias toward capital-using. Distinctively, evidence on gender indicates that, despite the lower per capita loans given to female entrepreneurs, they have had a positive effect on cultural employment in some provinces.