Bridging the Gender Gap in the Finance Sector

Women's financial inclusion ends up being a form of social inclusion; therefore, public and private actors need to put it at the center of their agenda.

The Woman Post | Diana Sedano Valdes

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Lately, most of the media have published several articles on women's financial inclusion standards. In fact, it is the beginning of the year and most of the reports from International Organisations and consulting firms on this topic have been published. Why is it important to keep saturating the media with more reflections on inequality in financial access? Wouldn't it be good for women to move away from oppressive capitalist cocoons? At what point is alternative finance a real "alternative" for women?

Financial access includes the right and opportunities to join a bank or any institution with the ability to make money out of money. Whether it is to fight inflation or to become a broker or trader in the capital markets, access to the banking system has become a priority for grown-ups. However, having access to a bank account - a primary product among financial instruments - is not just a matter of asset value; the absence of a bank account inhibits having a job, getting a rent contract, or paying bills. It is a cycle that blocks people's well-being: you need to open a bank account to get a job, but you need a job to have savings to open an account; you are obliged to put in a phone number, but you need a bank account to demand a line. The difficulties to avoid this cycle depict the XXI century urban-centered basic needs.

Thus, financial inclusion ends up being a form of social inclusion as well. Women tend to be excluded from the financial system because of structural issues such as access to private property, basic and high levels of education, and unpaid household activities such as cooking, cleaning, and childcare. As a result, women working in the informal economy have been left out of equity in wealth production. This leaves us with a scenario where only 49% of women have a bank account in Latin America, while it is 94% for OECD countries; and where only 11% of women have access to credit lines.

The COVID-19 outbreak has widened the disparities between women and men, also highlighting gaps in access to financial services. The breach is notable when it comes to small and medium-sized enterprises, or activities normally attributed to female roles such as beauty salons, sewing shops, or restaurants.

Also read: IS THERE PROGRESS ON THE ISSUE OF FINANCIAL INCLUSION FOR WOMEN?

The impacts are even worse when contrasted between rural and urban regions, at least in Latin American and African countries. This situation can be precarious for women who are heads of households and financially responsible for their families on their own. In fact, gaps in banking penetration rates became visible when governments began to provide subsidies in the crisis context; many women had to open a bank account to receive these aids.

Women do not need pink cards or shopping cards as a strategy for inclusion, they ask for the same opportunities to have savings, pay their bills, or get leasing. Nor do they ask for gender bonds for women's projects, when it is men who have the right to manage them. Financial inclusion is a pro for macro stability of States, as it is risky to concentrate assets in a few actors. Women should have access to more business opportunities, education, insurance, and retirement savings.

Usually, women depend on somebody else’s financial products due to insufficient incomes or high risks for lending. Excluded women sometimes have to look for substitutes or what is called basic alternative financing. This is the case for some women in the Islamic world who have to adapt to Sharia financial products or for vulnerable women who rely on uncontrolled lending schemes where lenders attribute interest rates autonomously. Lack of opportunities because of gender bias can make women more at risk with non-regular financial products. Therefore, public and private actors involved in the financial system need to put inclusion at the center of their agenda.

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