Syndicate content

April 2013

Financial Inclusion and Legal Discrimination against Women: Evidence from Developing Economies

Asli Demirgüç-Kunt's picture

More than 1.3 billion women are excluded from the formal financial system. These women – the overwhelming majority of whom reside in developing countries – lack the basic financial tools critical to asset ownership and economic empowerment. Even something as simple as a deposit account provides a safe place to save and creates a reliable payment connection with family members, an employer, or the government. A formal account can also open up channels to formal credit critical to investing in education or in a business. Yet women are 15 percent less likely than men to be financially included.  Why?

In a new study and summary companion note we document and analyze gender differences in the use of financial service using new data from the Global Financial Inclusion (Global Findex) Database. Our analysis is based on almost 100,000 interviews with adults in 98 developing economies in 2011. We also combine the Global Findex data with cross-country data on legal discrimination against women from the World Bank’s Women and Law Database and on cultural norms from the OECD’s Gender, Institutions, and Development database to examine their relationship with financial inclusion. Because the later country-level variables show no variation across high income economies, our econometric analysis focuses on a sample of up to 98 developing countries.

Mainstream Media for Social and Financial Change

Bilal Zia's picture

 

Financial illiteracy remains a pressing problem in the developing world and a myriad of financial literacy programs are now underway to educate and help poor individuals make informed financial decisions. Research on the effectiveness of such programs lags considerably behind implementation, but several evaluations are now underway to understand mechanisms of impact.

But even the best designed, most attractive education tools may fail to reach everyone in a cost-effective manner; and not everyone in the target audience may be interested in taking time out of their daily lives to attend such sessions.

In recent research in South Africa, a colleague of mine, Gunhild Berg, and I tested the idea of taking financial education to the masses without disrupting their daily routines, and without incurring exorbitant production and delivery costs. And we did it, of course, by turning to television!

Sex and Credit: Is There a Gender Bias in Lending?

Thorsten Beck's picture

Group identity in the form of family, ethnicity, or gender is a powerful predictor of social preferences, as shown by theory and empirical work. In particular, people generally favor in-group over out-group members. Such favoritism can have positive or negative repercussions. On the one hand, it can lead to inefficient transactions and lost opportunities. On the other hand, group identity may also entail trust, reciprocity, and efficiency due to shared norms and understandings. In recent research with Patrick Behr and Andreas Madestam, we gauge these opposing hypotheses, examining one important form of group identity, gender, and the consequences of own-gender preferences for outcomes in the credit market. We use microcredit transactions as they are an ideal ground to test these different hypotheses, relying heavily on transaction between loan officers and borrowers.

Access to bank credit after corporate default

Diana Bonfim's picture

During the last decade the literature on factors affecting corporate default increased exponentially. However, surprisingly little is known about what happens to firms after they default on their bank loans. How many firms are able to overcome the financial distress that led to the default on bank loans? Do these firms regain access to credit? How fast is this process? Which firms have more difficulty in regaining access? In this article, we shed some light on these important questions.

We take the occurrence of defaults as given and analyze what happens to the ability of firms to access credit markets after an episode of financial distress. This is a relevant question, as not all the firms that default on their debts are economically unviable. In many cases, firms default on their liabilities due to unexpected events which do not compromise their economic viability. This question relates closely to the literature on default recoveries but it goes one step further and asks about the ability to borrow again after an episode of financial distress.1