How Does Gender Determine Financial Challenges?
Is there an interaction between gender and gender role regarding financial challenges or financial literacy? How big is the challenge of financial inclusion for one of every three women in the world — or 1.1 billion? Globally, women are 7% less likely than men to have basic transactional accounts and are excluded from the financial system. Moreover, this disparity rises among the poor women living below $2 a day.
Gender Determines Financial Challenges
The global scale of women’s financial exclusion makes it clear that they rely on personal networks to meet their financial needs. This makes them vulnerable to lose, and exploits and reinforces the cycle of poverty. Therefore we need to focus on women to determine gender financial challenges, in order to achieve universal financial access. But this is not an easy task, since expanding finance for women brings some unique challenges.
Excluded Women are Harder to Identify
Household surveys are expensive, but they are the only mechanism for identifying who is outside the banking system. Banks can survey their client’s transactions, but this limits them to people who already have financial access. Women are informationally disadvantaged with less diverse networks, and less likely to receive referrals from people within their network or community.
Women are More Difficult to Reach Through the Usual Channels that Target Men
This includes wage payments as well as savings accounts. Even with a scale-up of digital wage payments, only 29% of women received wages in the past year. This data when compared with men, shows they twice as likely to have received them. However, Findex data shows that men and women have similar rates of receipt.
Financial Providers Have Less Incentive to Cater
Because women require more upfront investment to bring on as customers, women often prefer informal products, particularly for savings, and reaching them entails higher costs. Banks that successfully lent to women provide non-financial services such as leadership training.
Social Norms Constrain Women for Financial Services
Often times women are not encouraged to have financial independence, and sometimes they have mobility constraints, which makes it difficult to engage with financial institutions as gender often determines financial challenges. There are several economies where husbands can constrain their wives’ mobility outside the home.
Women Have Less Access to Technology
With mobile phones that could radicalize rates of financial inclusion, to determine financial challenges, the gender gap risks increasing if women are not specifically targeted. The GSMA estimates that 200 million fewer women than men own a mobile phone, and are less likely to own a mobile phone.
Conclusion
The importance of women’s access to finance goes beyond financial inclusion to determine gender gap challenges. The average income loss due to gender gaps in entrepreneurship is estimated at 25%.
