BRIDGE Report 39: Gender Issues in Financial Liberalisation and Financial Sector Reform

Author: S. Baden
Publisher: Institute of Development Studies UK
Publication Date: Jun 1996
Do interest rates or financial services matter to women in developing countries? This report analyses gender issues in financial liberalisation and argues that processes of financial sector reform affect men and women differently. Gender analysis has an important role in the design and implementation of financial sector restructuring. The failure to recognise how changes in the financial sector affect women and men differently may mean that women do not have the same opportunities to borrow money or access savings as men do. Policies must remove discrimination against women in the financial sector, assure women's property and credit rights, and encourage them to accrue savings in order to boost their financial autonomy.

Financial liberalisation is the removal of government limits and restrictions on interest rates, exchange rates, lending, and access to foreign exchange. Financial sector reform policies include a broad range of attempts to improve financial sector institutions (including banks and credit unions) through restructuring and staff retraining. Little attention has been given to how these processes affect women differently from men. Existing research in this area shows that access to financial services is biased against women, particularly in their access to credit and savings. The following factors require recognition and further attention: . Gender issues in financial liberalisation are currently restricted to discussion in terms of women's access to credit for small-scale enterprise. . Sex-dissaggregated data on patterns of borrowing, savings and investment, and their trends over time is unavailable. . Formal financial sector reforms have relatively little impact on non- corporate borrowers, who are more likely to be women. Small-scale women borrowers may be indirectly affected through impact of reform on informal intermediaries ('middle-men'), from whom they borrow money. . Women lack equal rights to property and land titles are typically in the name of the male head-of-household. . Financial liberalisation has had positive gender-related effects in some countries where newly created financial institutions are more successfully responding to women's needs through varied credit and savings services, simple and flexible procedures, and removing the prerequisite of having to own assets in order to borrow (e.g. Citi Savings and Loan in Ghana). . Women's savings are essential for improved financial autonomy, as it allows women to accumulate their own money that they can control. Given the above considerations, policies and programmes must incorporate the following: . Financial institution reform should include addressing gender discrimination in the banking sector. Reform of banking laws and procedures, the introduction of new management and incentive systems, and improved staff training to remove gender bias must be introduced, and donor agencies can play an important role in promoting these processes. . Credit and savings programmes must be continually monitored and evaluated to determine the relative participation of men and women, repayment rates, use and control of loans, and investment behaviour. . Bank policies on lending and providing deposit facilities to intermediaries require review, to determine how these affect women and men differently (as both intermediaries and clients). . Women's capacity to save, secure, and retain control over their savings is of utmost importance and should be given greater priority. . Measures are needed to ensure that women have equal rights to property. Legal reforms should be introduced, along with procedures and institutions to enforce these laws (e. g. joint names on land titles). . Further research is needed, in particular to investigate gender issues underlying macroeconomic trends in savings and investment, and savings and investment patterns of men and women in different sectors of the economy (such as services and agriculture).