Women are still less likely than men to have bank accounts, despite an extra 1.2 billion people joining financial institutions over the past seven years, a new report from the World Bank has found.
Worldwide, 72 percent of men have an account compared to 65 percent of women—a gap of 7 percentage points that has persisted since the organization first began collecting data on financial inclusion in 2011. The gender gap in developing countries is 9 percentage points, also unchanged over the past seven years. Today there are 980 million women globally who do not have an account.
The report polled 150,000 people in 144 countries in collaboration with Gallup, and was funded by the Bill & Melinda Gates Foundation. The results will come as a disappointment for many working in financial inclusion.
Efforts to get more women signed up for accounts have increased in recent years as development agencies and governments alike turn to financial products as a tool for poverty alleviation.
"The hope is to narrow the gender gap around the world, but women face specific challenges, so it's often harder to 'bank' women—especially as we're increasing account ownership," said Leora Klapper, the lead economist at the World Bank's Development Economics Research Group and a co-author of the report. "Of the 'unbanked' now, the majority are women, poorer adults living in rural areas, and out of the workforce, which are harder populations to design appropriate financial products for."
Despite the increased attention paid to women's financial inclusion, experts say significant change will come only through focused efforts from governments and banks to provide services for women. "I was not at all surprised that [the gender gap] would not have changed," said Mayra Buvinic, senior fellow at the Center for Global Development. "In the past six or seven years there's been a lot more awareness, but that awareness has yet to translate into large-scale, meaningful progress."
While there is no significant difference between men's and women's account ownership in many high-income countries, the gap can approach 30 percentage points in countries such as Bangladesh, Pakistan, Jordan, and Turkey. At the other end of the scale, women are more likely than men to be account-holders in Argentina, Georgia, Laos, Mongolia, and the Philippines.
As well as having poorer overall access to banking services, women were found to be 11 percentage points less likely than men to be financially resilient in times of crisis and 5 percentage points more likely to have an inactive account.
Gains in India
The report's authors highlighted the strides made in India to bring more people into the financial system through its biometric identification system known as Aadhaar, along with a zero-balance account scheme that allows people to open accounts without having to deposit money in them.
The financial inclusion drive signed up 290 million new people for accounts, including 170 million women. The proportion of India's population who have bank accounts leaped from 53 percent in 2014 to 79 percent in 2017. This had a significant effect on the country's gender gap. In 2014 it was 20 percentage points—more than double the world average; by 2017 it had fallen to 6 percentage points.
Debdatta Saha, assistant professor of economics at South Asian University in New Delhi, said zero-balance accounts provided through a government program called Pradhan Mantri Jan Dhan Yojana had been a crucial factor in narrowing the gender gap. "Because it's zero balance, there's definitely a whole bunch of women who are incentivized," she said. "There's a history with these women of asymmetric bargaining power at home, so if you keep your money in cash, there could be domestic violence, it may be taken away from you."
She said being able to bank that money could give women an added layer of security and independence without having to worry about being fined for failing to meet minimum reserve requirements.
The progress in India masked significant losses for women in other countries, said World Bank economist Dorothe Singer, another author of the report.
"There are a couple of countries where we've seen tremendous growth in account ownership, but this growth has been very uneven, in the sense that almost all the growth we've seen between 2014 and 2017 has gone to men," she said.
In Bangladesh, overall account ownership jumped from 31 percent to 50 percent, but very few of those accounts were opened by women. This meant the gender gap increased from a developing world average of 9 percentage points in 2014 to 29 percentage points in 2017, one of the largest disparities in the world.
Does Financial Inclusion Work?
The report's authors acknowledged that evidence was mixed on whether financial inclusion could alleviate poverty, and Klapper said that opening bank accounts for people was not enough to change lives on its own. "Having an account isn't the angle—it's using the account to achieve development goals, to save, to invest in business and educational opportunities, to build financial resilience."
This is particularly relevant in India, where, despite the massive growth in ownership, 48 percent of accounts remain inactive, the highest rate in the world. Women are overall less likely than men to use new accounts.
Buvinic said women in particular need more than basic account ownership to benefit from financial inclusion programs. "Women are not all the same. Very poor women need more than one intervention to increase their earnings and transform their occupations."
But she pointed to early indications that the potential to save individually and privately could make a real difference for women in terms of starting or growing small businesses.
The Promise of Technology
The report highlighted technology as a potential tool to speed progress on gender equality in access to finances. "Mobile money accounts can help narrow the gender and income gap," Klapper said. "For example, in Cote d'Ivoire men are twice as likely as women to have a bank account, yet women are just as likely as men to have a mobile money account only."
It's long been thought that mobile banking can overcome many of the hurdles that prevent women from accessing financial services—reducing the need to travel long distances to access money and providing a level of privacy that allows them to protect their savings from others.
"Mobile savings are something that women want and there is some evidence that savings really increase their earnings and transform their enterprises," Buvinic said.
But the key to harnessing mobile technology will be to make sure women have equal access to phones in the first place. Despite gains in countries in sub-Saharan Africa such as Cote d'Ivoire, the overall gender gap in mobile phone ownership in the developing world is wider than the bank account ownership gap, at 10 percentage points.
Correcting Gender Bias
What does the persistence of the gender gap over the past seven years tell us? Buvinic said the onus was now on financial providers to start making products more suitable for women's requirements, and not necessarily on making women more suitable for the services that exist.
"Up to now, we have been focusing a lot on expanding women's capabilities, women's financial literacy knowledge, and women's ability to use accounts. But financial sector providers need to take a much more critical and in-depth look at the way they're providing financial services and start trying to correct the gender bias in the provision of services," Buvinic said. "Financial providers have to start designing products for women. It is particularly important that they're individual, they're private, and they're secure."
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