Short for Women in Small Enterprise, WISE aims to tackle some of the barriers that typically hold women business owners back. It offers intensive financial training, one-on-one business coaching, the opportunity to network with other women entrepreneurs, and access to loans big enough to help women grow their businesses significantly. Backed by a guarantee fund established by Oxfam America and offered through a commercial bank, the loans range from $3,000 to $50,000—the kind of cash women rarely can raise on their own. Photo: Ilene Perlman / Oxfam America

A reduction in gender inequality would help tackle income inequality.

Mara Bolis is a Senior Advisor on Market Systems at Oxfam America.

Following Bernie Sanders’ once unthinkable win in the New Hampshire primary, it’s clear that rhetoric about inequality has gone from fringe to mainstream.  From Pope Francis to Beyoncé –cultural icons are bringing their unique lenses to the issue, shining a light so bright that no one can ignore it.

While the much of the recent press has focused on inequality in the US context, inequality is of course a serious issue on a global scale. Many solutions have been offered to tackle inequality including  ending corporate tax havens, investing in public services and promoting decent jobs with fair pay.  But how’s this for a radical thought : applying a gender lens to these policies helps you go farther faster. This idea is clearly laid out in a report released last year by the International Monetary Fund (IMF). The paper argues that gender inequalities around wage gaps, labor force participation and disproportionate participation in the informal economy exacerbate income inequality. The opposite is also true. A reduction in gender inequality would help tackle income inequality.

To address these outcomes, we must address the drivers of unequal outcomes. The report argues that “inequality of opportunities,” (i.e. women’s unequal access to education, health services, financial markets and resources) around the world foster economic inequality for entire countries, and by extension, the world.

Access to finance is more important than you might imagine.  Much evidence exists on women’s central role in the household to enable access to basic human needs: good health services and practices; education for self and children, and access to potable water (despite distance).  Yet, when women do not have access to capital for either their business or consumption needs or access to savings sources, they are unable to have the financial resources to carry out these responsibilities. Hence the insidious outcomes related to the “inequality of opportunity” known as the “gender finance gap.”

The World Bank research shows in virtually every region, the percentage of women with access to financial tools is lower than their male counterparts.  While the drivers of these outcomes are many, at least one insufficiently explored factor is the role of hidden bias.  In the words of one female Haitian entrepreneur interviewed for an Oxfam report, “If you go to a bank as a woman, they do not consider your request seriously, or they direct you towards a microcredit institution when what you really need is a $20,000 USD loan.” Another entrepreneur described that her loan request was denied and then later approved after her male counterpart presented the same documentation on her behalf.

However, apart from anecdotal evidence, there is insufficient research demonstrating the role of bias and, as such, banks feel little motivation to help close the “gender finance gap”. As part on its wide portfolio of work on financial inclusion, Oxfam has begun to utilize mystery shopping methodologies – with promising results. In 2015, we performed a pilot mystery shopping test in Guatemala in association with Oxfam’s Women in Small Enterprise (WISE) initiative, working with male and female entrepreneurs as research participants. For 11 out of 13 matched pairs, the female entrepreneurs applying for loans received disadvantageous loan terms relative to their male counterparts. In fact, several of the female researchers were requested to come back to the bank with a letter of approval from their husbands before proceeding with the loan application. Furthermore, many of the female research participants relayed that they did not feel that the bank staff was interested in them as prospective clients.

In Oxfam’s Women in Small Enterprise initiative (WISE) in Guatemala, we plan to use research such as this to make banks aware of these “hidden biases” so that they can be identified, understood and addressed.  Eventually, we hope to develop a tool that allows banks across the world to monitor their own performance in treating people fairly, while allowing watchdog organizations like Oxfam check on performance from the outside as well.  Neither NGOs like Oxfam, nor the IMF, and not even Beyoncé can fix the “gender finance gap” by themselves.  We need to bring the banks to the table to develop multi-stakeholder solutions that pro-actively reach women clients.  This research effort has as its ultimate goal to inspire dialogue between women entrepreneurs and the organizations that support them with financial sector actors and other stakeholders who are in a position to influence more equitable outcomes.  Conversations like these are the building blocks of an economy that works for everyone.