Gender Bias in Access to Loans: A Cross Country Analysis

Abstract

This paper investigates the gender bias in access to loans by using the World Bank’s 2011 Global Financial Inclusion data on 147 countries. There are two opposite views in the literature on the relationship between gender gap and access to financial services. While some studies found no difference in terms of credit and interest rates for males and females, others suggested that there is gender bias in access to financial services and its usage due to sociocultural, institutional, and legal barriers. In turn, women’s lack of access to financial services is expected to have negative impact on their labour force participation as well. This study analyses how demand side and supply side variables affect women’s access to business loans by using cross-sectional regressions. Interaction of demographic and institutional characteristics is also introduced in order to determine to what extent these characteristics influence women’s access to financial services. Findings show that, increase in gender equality leads higher institutional loan share taken by female. The estimates show that improvements in the gender equality and growth create positive impact on access to loan services of financial institutions