The Female Share of Microcredit and Provincial Economic Activity in Ecuador: Evidence from State-Dependent Local Projections

Over the past decade, the microcredit portfolio extended to women has grown strongly across Latin America, yet the empirical literature has yet to deliver a consistent verdict on its aggregate effect. Macroeconomic studies typically rely on linear specifications that do not allow for dependence on the state of the business cycle. For Ecuador, moreover, there is no systematic empirical evidence on this link. This study provides the first monthly territorial evidence for a dollarised economy by estimating the dynamic response of provincial sales to changes in the female share of microcredit. We employ a panel local projections framework with a logistic smooth transition function, which identifies contractionary and expansionary regimes without resorting to discrete thresholds. The sample covers the country’s 24 provinces from January 2018 to July 2025, with 2136 effective observations. The results document a sign reversal that depends on the state of the cycle. When the cycle is in contraction, a one-percentage-point increase in the female share is associated with a cumulative fall in sales of up to 0.7 percentage points at 12 months. When the cycle is in expansion, it is associated with a cumulative increase of up to 0.5 percentage points over the same horizon. These findings indicate that the transmission channel is state-dependent in sign as well as in strength: the response reflects the cyclical conditions and the productive structure into which the credit is placed, rather than any intrinsic attribute of lending to women. In low-activity phases, gender-focused financial inclusion could be coordinated with countercyclical public policy so that its transmission to real activity operates in an expansionary direction.