World Thinking Day: Do Millennial Women Have Equal Access To Credit?

“On virtually every global measure, women are more economically excluded than men.” – The World Bank’s Gender at Work report (2014)

Millennials across the globe have been defining their equations and setting their own norms in the career they choose or the business they own. They are the trendsetters, the startup generation, the innovators irrespective of their sex or background. The current era is ushering in a new sense of equality among working professionals. Still, it won’t be an understatement to quote that the discrimination and lack of opportunities millennial women face with respect to pay, credit and spending choices are quite conspicuous. On this World Thinking Day, a discussion about the insights into what makes the other sex a lesser suitable candidate for institutional and formalized credit facilities is much needed. 

There’s plenty of statistical evidence pointing to the severe gender inequalities in terms of financial inclusion operating at the ground level. In spite of the great amount of publicity over gender parity legislations and erudite discussions over the state of affairs at the world forums, figures point to gaping holes in the provision of financial inclusion for the millennial females: 

The World Perspective

• Of the 141 countries surveyed by the European Bank for reconstruction and development, 
• In 79% of the countries, women had far less access to bank accounts than men.
• In 78% of the countries, women found it more difficult to get a loan than their male counterparts. 
• 82% of the countries had their women less conspicuous in terms of savings in a financial institution. 
• Similar stats showed the imbalance in terms of debit and credit card usage with 78% and 79% of the countries with debit and credit card usage disparity respectively. 
•  In 2014, 58% of women had a bank account compared to 65% of men.

The Indian Case

India ranked 142 out of the 149 countries on economic participation and opportunity in the 2018 World Economic Forum’s Gender Gap Index. This figure clearly denotes the extreme gender imbalance in the labor market and entrepreneurship. Gender roles have been defining the opportunities and share women get in the business space. And the major obstacle in this imbalance is the denial of equal credit and borrowing facilities to females.
Let’s look into some major factors leading to this lopsided credit rationing:

#1 Share in the Total Workforce

All around the world, women comprise 40% of the workforce, while in India they form only 23.3% of the total workforce. This disproportionate workforce ratio is one of the major factors. A male is still considered the breadwinner of the family, while the female has the role of a subsidiary. The economic contribution of the females to the GDP is less because:

• Domestic services are never a part of GDP as they do not hold any economic value nor do they provide the women with any financial independence.  
• Women have lesser access to higher education and career opportunities in comparison to men. 
• Societal norms and maternal responsibilities often push women to the periphery of the economic conundrum.  
• Safety issues and poor infrastructure leading to greater crime rates against women often dissuade them to have a career path. 
• Labor-market deregulation policies are given effect without prioritizing women. 

#2 Entrepreneurship 

In India, women entrepreneurs are meagrely represented at 10% of the total number of entrepreneurs. 98% of the women entrepreneurs hold micro-enterprise ownerships across India and 84% of such enterprises do not hire workers at all. Though the equations are changing, the names of such successful female entrepreneurs can be counted on the fingers. Small and medium scale enterprises house the largest female workforce majority of which are either contract workers or salaried employees. 

The informal sector contributes to nearly half of the GDP in India. Women working in this sector have no or very limited access to credit facilities:

• Patriarchal mindset is still prevalent in the work culture of offices due to which many men find it derogatory to work under a female boss. 
• Institutional hurdles and high reliance on self-financing. 
• Insufficient maternity provisions in the legislature limiting their career growth. 

#3 Property Inheritance norms

A woman may be earning sufficiently to fend for her family but her right to say in financial matters of the house is almost always overshadowed by their partners. They may have a bank account or use debit/credit card but being the second sex, women are deprived of complete financial liberty. Restrictive norms around inheritance implanted by society further impede their access to secured credit. Over 90% of the establishments owned by women rely on informal sources of finance. Institutions refrain from granting loans to females for the lack of collateral or stability of job tenure.  80% of women-owned businesses with credit needs are either unserved or underserved. This is equivalent to a massive $1.7 trillion financing gap.

#4 The pay gap and financial awareness

Women are largely employed in small scale industries with low productivity and the majority of these industries form a part of the informal sector (such as agriculture and construction) where no labor laws are put into force. For equal work, women:

• Receive lower wages, 
• Spend less average time for schooling and 
• Have to opt for the responsibilities of a homemaker curtailing any scope for growth.

Only 20% of the female workforce is employed in the formal sector. Financial planning and management, when it comes to women, is considered the partner’s job for lack of financial awareness. Millennial women are trying to break out of ignorance and managing and planning their finances but the parity is still a far-fetched dream. 

Virginia Woolf stressed the need for financial independence for females to become full-time writers in her essay ‘A room of one’s own’. On similar grounds, the utmost need is to provide equal opportunities to women workers and entrepreneurs, especially millennial women, by unhindered access to credit and capital. 

EarlySalary, one of the popular lending portals, has been known to provide consistent financial services to professionals and underserved salaried millennials irrespective of their gender and with minimal formalities involved. The idea is to contribute towards the financial inclusion of every male and female in the economy.