Politics of Poverty

Getting to know what we don’t know about gender & financial inclusion

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Saving for Change is an Oxfam America regional program in East Asia, that provides rural women and men in Cambodia with access to financial services within their community. (Photo: Sokunthea Chor/Oxfam America)

How can hidden bias testing reveal important information for equality and business.

According to the World Economic Forum, at current rates of progress it will take 217 years to close the economic gender gap.  In 2017, the World Economic Forum’s Global Gender Gap Index increased meaning that progress towards gender equality has slowed for the first time since the index began.  While inequality manifests itself in many ways, financial inclusion is one important driver.  If you can’t save and you can’t borrow, it’s hard to get ahead.  World Bank research shows in virtually every region, the percentage of women with access to financial tools is lower than their male counterparts.  The question is: Why?

Imagine this scenario:  You are a woman running a small but successful pharmacy in a country like Guatemala, where women’s leadership is not the norm.  You know the market, you know where the gaps are and feel you are ready to open a second location in a nearby town but you lack the funding.  You are skeptical that a bank will lend you money to expand your business but nonetheless you decide to try.  You walk into a bank and wait to make your case to the loan officer, but are passed over by a man who came in after you.  You take notice. And you imagine that the loan officer thinks the man has more money and would be a more lucrative client.  When you do get to see a loan officer, you are asked if you are married and, if so, could you please provide your husband’s identification.  Finally, you are offered this suggestion, “It would be better if a man opens the account instead of you.” You feel defeated, and the most tragic part is this isn’t imaginary.  This is a compilation of observations from participants in a study released today by Oxfam, Value for Women, and Babson’s Center for Women’s Entrepreneurial Leadership looking at the role of bias in bank decision making and the tools that exist to combat it.

Many women – and men – felt that men were treated better. One participant reflected, “I think that in this environment men tend to be taken more seriously than women. I think that if a man would have been in my situation, he would have been given more consideration.”  A male participant described his experience this way, “Unfortunately, we still live in a world where machismo is present in daily situations. As such, I believe that I was treated better… there was a woman who was applying for a loan at the same time as me. She had to wait for a long time, not like me. The loan director served me immediately, which was preferential treatment.”  That said, when we looked at the loan awards, this particular pilot study did not find significant differences in loan awards by gender.  This suggests a problem specific to how banks communicate their willingness and interest to lend to women.

In many cases, financial institutions believe they are “gender neutral” and do not give preference to any particular sex.  Yet, when overcoming deep historical inequalities, gender neutrality is really not neutrality at all.  Global Alliance for Women (GBA) and McKinsey & Company study that interviewed over 30 CEOs and other senior bankers from financial institutions found that many banks continue to think male and female clients require the same approach.  While the processes might be uniform once you get over the many hurdles women face to get to the point of a valid application (e.g., second-class customer service, obtaining access to collateral, achieving sufficient levels of financial literacy, etc.), only a few women remain.  So the cycle continues.  Our institutions must acknowledge and do their part to tackle the ingrained bias and structural barriers that prevent women from achieving equal access.  Finding out what you don’t know by checking whether men and women are being treated differently is a good place to start.

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