Gender and digital financial inclusion: What do we know and what do we need to know?


Sarah Gammage, Aslihan Kes, Liliane Winograd, Naziha Sultana, Sara Hiller, and Shelby Bourgault

1. Introduction

Better and more meaningful financial inclusion may prove to be the key to unlocking the potential for micro and small enterprises to grow, reducing the exposure of poor and rural communities to income shocks, dynamizing growth, and promoting more sustainable and equitable development. Recent analysis of financial inclusion underscores that where individuals have access to financial services and products, even in poor communities, they are better able to plan and manage their income (Ruiz, 2013) and households are more likely to hold savings and to invest these savings in productive uses(Schaner, 2016b). Controlling for income and sector of employment, households that have access to savings instruments and insurance are better able to withstand economic shocks (Karlan et al., 2014; Janzen and Carter, 2013; Cole et al., 2013); they are also more able to invest in education for their children and purchase healthcare services (Prina, 2015; Dupas and Robinson, 2013a; Duflo, 2012; Bauchet et al., 2011). Communities in which a greater proportion of the members are banked are more likely to have higher incomes (Bruhn and Love, 2014) and experience lower poverty rates (Kast and Pomeranz, 2014; Burgess and Pande, 2005), denser economic activity, stronger forward and backward linkages to productive activities, and more and better employment opportunities (Bruhn and Love, 2011). Indeed, Beck et al. (2007) find that controlling for other relevant variables, 30 percent of the variation in rates of poverty reduction can be attributed to cross-country variation in financial development.

Better and more meaningful financial inclusion may also foster reduced gender inequalities. Women who have access to bank accounts, savings mechanisms, and other financial services may be better able to control their earnings and undertake personal and productive expenditures (Islam et al., 2014; Alam, 2012; Ashraf et al., 2010). They may also be able to make more choices about how they use their time, whether for employment, leisure, income-generating activities, or education (Field et al., 2016; Bandiera et al., 2013; Aker et al., 2016). They may have more substantive autonomy over their lives in decisions ranging from employment and marriage to whether to use contraception (Holloway et al., 2017; Suri and Jack, 2016; Pitt et al., 2006; Aker et al., 2016; de Brauw et al., 2014; Schuler and Hashemi, 1994). They may be better able to grow their businesses, to choose where and how to work (Field et al., 2016), and to raise their productivity and earnings and reduce their chances of being poor (Suri and Jack, 2016; Swamy, 2014). They may also have more options to leave abusive relationships and experience reduced exposure to intimate partner violence (Panda, 2014; Garikipati, 2008).

Yet untapped opportunities exist to provide a broader array of financial services for the poor and particularly for women. Conventional financial products and services still do not seem to reach the poor and women well. According to the 2014 Global Findex data, 57 percent of women around the world have a financial account, compared to 64 percent of men (Demirgüç-Kunt et al., 2015). Furthermore, the International Finance Corporation estimates that over 70 percent women-owned small and medium enterprises (SMEs) have inadequate or no access to financial services (Koch et al., 2014). The gender gap has persisted despite the growth in the number of people with access to financial services, and the gap is largest among the poor: poor women are 28 percent less likely than poor men to have a formal bank account (Demirgüç-Kunt et al., 2013).