This research assesses the effects of financial frictions faced by female entrepreneurs on
macroeconomics performances in Cameroon. We address this important issue, using a Dynamic
Stochastic General Equilibrium model with financial micro-foundations. The model features two
sectors such as, a production sector dominated by female entrepreneurs and a production sector
dominated by male entrepreneurs. Financial frictions appear because entrepreneurs face
collateral constraints when borrowing from the banking sector. The steady state and the calibration
analysis demonstrate that the female sector is labor-intensive whereas the male sector is capital
intensive. But, when the female sector is granted loans to the same extent as in the male sector, it
performs better in term of value-added in GDP. The benchmark analysis reveals the complementary
role of both sectors in sustaining economic activity during a downturn. The Scenarios analysis
emphasizes the expansionary effect of the loosening financial constraint, with female entrepreneurs
acting as main driver of the economy activity. Thus, institutional frameworks that relax collateral
constraints, grant exemptions for enormous requirements, enforce properties right law, and promote
transparency and credit-information sharing can make big inroads in alleviating borrowing
constraints, increasing financial inclusion and enhancing macroeconomic outcomes.
