Month: December 2023

Advancing Financial Inclusion for Women in Bangladesh Requires a Focus on Financial Capability

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Over the past decade, Bangladesh has taken dedicated steps to expand financial inclusion. The BIGD International Conference: Making Digital Finance Work for Women in Dhaka showcased those efforts by sharing recent global insights on how to make digital finance work for women’s economic empowerment. For example, results from BIGD’s WEE-DiFine Initiative, which supports rigorous research at the intersection of digital finance and women’s economic empowerment, were unveiled during the event. In addition, the event sessions included an interactive poster presentation featuring global DFS innovations, and a panel discussion with industry experts on the digitalization of microfinance in Bangladesh. In all, the conference highlighted ways to make digital finance work for women’s economic empowerment with an emphasis on overcoming specific barriers and embracing opportunities related to digital microfinance in Bangladesh.

This blog post shares the Global Findex data presented at the conference highlighting the significant progress Bangladesh has made in financial inclusion overall and for women specifically in the past decade, and the barriers and opportunities that still exist.

Account ownership in Bangladesh rose by 21 percentage points in the past decade to reach more than half of all adults.

According to the Global Findex 2021, 53 percent of adults in the country own a financial account, a 21-percentage point increase from 2011 when only 32 percent of adults had one. Account ownership gaps between wealthier and poorer adults, and between more and less educated adults, narrowed significantly. Yet in the same period, the gender gap in account access between women and men increased to 20 percentage points from 11 percentage points (Figure 1).

Figure 1. Growth in mobile money accounts have narrowed the gender gap

Adults with an account (%), 2011-2021

Source: Global Findex database, 2021.

Why does gender inequity seem to be a more intractable financial inclusion challenge in Bangladesh compared with inequities related to income or education level? To answer that question, it helps to look closer at the dynamics driving financial inclusion in Bangladesh.

Mobile Money is Enabling Increased Equity in Financial Inclusion

Mobile money in Bangladesh has helped bring disadvantaged and vulnerable groups into the formal financial system. Twenty-nine percent of adults had a mobile money account in 2021, up from 3 percent in 2014, when the Global Findex first began collecting data on mobile money accounts. About half of all mobile money users, or 15 percent of adults, use mobile money as their only form of financial account.

Women have benefited from the rise in mobile money account ownership. Twenty percent of women owned mobile money accounts in 2021, up from 2 percent in 2011. The total increase in the share of women with an account of any kind since 2011 is also around 20 percentage points.

As women’s financial access has increased, so too has their use of different financial services—especially digital payments. Among women mobile money users, 82 percent used their account to make payments, including bill, merchant, or utility payments. About a third of women payment users also used their accounts to send remittances. In contrast, savings and borrowing via mobile money among women were low (4 percent and 7 percent, respectively), and 11 percent of women with a mobile money account used it to store money.

Cultural and Confidence Challenges are Restricting Mobile Money Benefits for Women

The appeal of mobile money lies in the fact that it provides an efficient, affordable, and safer alternative to traditional banking institutions. For instance, by eliminating the need to travel, mobile money accounts reduce social and administrative constraints so that women can safely receive money and transact while at home.

Yet field interviews conducted by the Global Findex team in Bangladesh also highlighted some challenges that keep women with mobile money accounts from benefiting as much from them as they could. For example, a women garment factory worker we spoke to told us that she sends her ATM card to her father living elsewhere in the country. She thereby lose autonomy over her salary.

There are multiple reasons why women may willingly relinquish control of their money. One relates to culture. An anthropological study led by BIGD explored woman’s DFS onboarding experiences in Bangladesh. As described at the BIGD conference, smartphones are sometimes considered taboo for women and girls, and women’s access to mobile banking agents—who are mostly men—might be constrained by women’s hesitation to give their phone number, necessary to access a mobile money account, to a male agent. Taking a photo to set up an account may also be problematic for women if they are required to remove their head coverings.

Even if a woman has successfully opened a mobile banking account, additional barriers may prevent her from enjoying its benefits. A WEE-DiFine-supported pilot study found that low levels of DFS awareness and cash flow constraints limited female domestic workers’ use of mobile banking. Few women in the study were aware of the link between economic independence and account ownership. Most women associated empowerment simply with higher wages, and not with personal agency or financial decision making. These perceptions may limit women’s motivation to deepen their use of mobile banking.

Beyond culture, there are other reasons why women may hand over control of their money to a male family member. A study conducted in Bangladesh during the early months of the pandemic found that 50 percent of digital financial service users relied on agents to complete transactions. The Global Findex reinforces that finding with data showing that nearly two-thirds of women with mobile money accounts need help using them. The takeaway is that while agents serve a key role in financial inclusion efforts, consumers who fully rely on them may be exposed to financial abuse and paying unsanctioned fees.

Barriers to Account Ownership may Further Limit Progress in Financial Access

The challenges noted above affect women who already have accounts. Additional barriers keep women without accounts (the ‘unbanked’) from embracing account ownership in the first place. The Global Findex survey asks unbanked adults about the financial inclusion barriers they face. The cost of opening and operating a financial account was named as a barrier by 42 percent of unbanked adults. Importantly, an additional 9 percent of adults said they “don’t know” when asked if cost was a barrier, suggesting these respondents do not know enough about digital financial services to have an opinion. In addition, over 60 percent of unbanked adults in Bangladesh say they would not be able to use a financial account (excluding mobile money) without help. Women were 12 percentage points more likely to say that than men.

These findings align with the baseline estimates from a WEE-DiFine-supported randomized controlled trial. They show that between 45 percent and 53 percent of respondents, depending on question framing [1],  indicated that mobile banking is too expensive. Additionally, between 29 percent and 50 percent believe mobile banking is hard to use. Finally, one third of women respondents indicated that mobile banking is not for someone “like them.” Together, these findings point to a lack of financial confidence as a barrier not only for banked women but also for the unbanked—one which may prevent them from proactively pursuing financial inclusion.

Governments and Financial Institutions Have a Role to Play in Building Women’s Financial Capability

A strong government-led consumer protection framework is critical for building trust and furthering the cause of financial inclusion. Governments can also help motivate greater financial autonomy for women by investing in digital public infrastructure (DPI), including biometric identification and digital financial accounts. Such infrastructure—key to broader digitalization across the Bangladeshi economy—would require women to own their own accounts and directly transact with them, a practice that has been shown to help people with less financial experience develop the capabilities they need to increase financial autonomy. Specifically, research has shown the benefits of using methods such “learning-by-doing” to build financial confidence. A study conducted with previously unbanked factory workers in Bangladesh included paying their wages into an account, and found that exposure to these new accounts enabled the workers to learn how to use them without assistance. Over time they used a wider range of features and learned to avoid illicit fees. Traditional classroom-based financial education, in contrast, has shown mixed results for improving financial capability.

Another approach to overcoming the barriers women face to financial inclusion is to digitalize more of the digital payment landscape across the country. In 2021, for example, only one-in-five private sector wage earners receive them into an account. In conjunction with gender-informed and culturally informed policies and practices (such as hiring more women as agents and working to remove stigma associated with mobile phone use by women), increased digitalization can help drive increased financial inclusion.

Digital financial services hold tremendous potential. To realize it, policymakers must promote the use of digital financial services and service providers must adopt a more customer-centric approach, including gender-inclusive financial services.

[1] Researchers designed two versions of survey questions to assess respondents’ attitudes – one version presented a positively-framed statement, and the other a negatively-framed statement. This design will allow researchers to assess to what extent responses are sensitive to question framing.

Leora Klapper and Kym Cole

Digital Financial Inclusion and SHGs in Rural India

Digital Financial Inclusion and SHGs in Rural India

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Digital Financial Inclusion and SHGs in Rural India

The Context

Digital financial services (DFS) hold great promise for low-income households, with the potential to improve privacy, security, and access to financial services. They also allow individuals to transact and manage finances, regardless of location. These benefits are particularly clear in India, which has become a leader in digital financial inclusion, opening more than 460 million bank accounts in 2022 alone. India has also linked accounts to unique digital identities and developed a Unified Payments Interface (UPI), which accounted for over 40% of real-time payment transactions in the past year. India’s ability to rapidly expand DFS has relied on the increasingly widespread use of mobile phones, which are used to conduct four in every five digital payments.

Though mobile ownership at the household level continues to increase, benefits within the household are not equally captured – women are 40% less likely than men to own a smartphone in India, representing a gap of 23 percentage points, which is larger than that seen in other low- and middle-income countries. This gap is driven, in part, by conservative gender norms that limit women’s phone use. As reliance on mobile phones and access to the internet for DFS increases, women may disproportionately miss out on the benefits of DFS.

One way to close the digital gender divide, both in terms of access to mobile phones and to DFS, could be to leverage India’s self-help groups, or SHGs. SHGs are credit collectives – groups of women that meet and provide small loans to members to help with financial expenses and emergencies. But in India, SHGs do much more than traditional models — they serve as a platform for the government to engage rural, marginalized women in activities such as trainings on income generation and other public sector schemes. Do SHGs also help connect women to DFS and counter norms that restrict women’s phone use? Here we report from new survey data collected across the central Indian state of Chhattisgarh, where we seek to understand whether SHG participation relates to women’s use of DFS, and whether SHGs can play a role in women’s digital inclusion.

Our Sample

In collaboration with our data collection partner, we recently completed interviews with over 20,000 rural women and men across 13 Chhattisgarhi districts. We found SHGs to be ubiquitous across this largely rural and remote state. In 98% of the sample Gram Panchayats (GPs, typically comprising one to two villages), there is at least one SHG present. 43% of female respondents are members of SHGs hosted under the State Rural Livelihoods Mission (SRLM). In our study area, on average, these women are married (94%), have little education (5.7 years), work in agriculture, and are representative of traditionally marginalized groups, such as “other backwards castes” (48%) and “scheduled tribes” (34%), which have been identified as vulnerable by the government and targeted as core participants in safety net schemes.

What We Found

Nearly all women in the sample have access to mobile phones within their households. Nearly nine in ten of these households own a smartphone, meaning these women could theoretically access mobile internet using a household phone. While households often own both smartphones and basic phones, 77% of women with phone access reported that the phone they access most frequently is a smartphone. That said, women’s phone ownership is much lower than their access: only 23% of women reported that they own and use their own phone. Many women simply borrow a phone from a family member.

Though digital inclusion has improved over the past several years, most women still do not use phones for advanced tasks like accessing the internet and using apps, including for DFS. Instead, they primarily use their phones for basic tasks like making and receiving calls. Even amongst women who reported primarily using a smartphone, only 27% reported using WhatsApp in the past month, 13% had sent an SMS, and less than 4% reported recently sending or receiving money using the phone.

Figure 1: DFS Knowledge by Gender

Digital Financial Inclusion and SHGs in Rural India

Across the board, knowledge of DFS is relatively widespread, but women are significantly less likely than men to engage with these services. As shown in Figure 1, just under 45% of all surveyed women have heard of payment apps, and 30% know that local shopkeepers use them. In contrast, 77% of surveyed males have heard of DFS, and 61% know of local shopkeepers that accept mobile payments. An even larger relative gap exists for DFS usage, where only 5% of all female respondents, regardless of SHG status, have ever used DFS, compared to 28% of male respondents.

How do women in SHGs compare to those outside SHGs? In the remaining analysis, we control for demographic characteristics including age, education, marital status, and women’s district to understand how SHG membership relates to women’s use of mobile phones and DFS. Controlling for these characteristics allows us to ensure that obvious differences across women that correlate with SHG participation, such as the household’s income level or differences in available services by location, do not drive results. Instead, we are able to assess the relationship between SHG participation and phone use while comparing across otherwise-similar women.

First, we see an SHG ownership advantage: women in SHGs are three percentage points more likely to use their own phone, compared to similar women not part of an SHG . Though they have slightly higher access to phones, SHG women who use phones are still not using them in more sophisticated ways. For example, 53% of SHG members dialed a phone number in the past 30 days and 70% answered a phone call, while only 18% used WhatsApp and 8% read information online, rates similar to non-SHG members.

Second, we see some advantages among SHG women in terms of knowledge: SHG members are five percentage points more likely to have heard of DFS, compared to women with similar demographics in their district that are not in SHGs. Although we lack data to definitively state what drives this knowledge advantage, it could reflect that women in SHGs have larger networks than those not in SHGs, have more direct exposure to DFS through other members of their SHG, or these women may have more direct exposure through information provided directly in SHG meetings. Despite this advantage, SHG members are no more likely to have used DFS than non-members, suggesting that other barriers to women’s DFS use persist.

Implications

In rural Chhattisgarh, women who belong to SHGs have better access to their own phones and are better informed about DFS than similar non-SHG women. However, SHG members are no more likely than non-members to use DFS, and DFS usage remains very low overall. In future analysis, our team will analyze data to unpack why SHG-affiliated women have better access to phones and more knowledge of DFS, but are not more likely to use DFS than non-members. In other research, we find that training women to help them access digital transfers can have important impacts on women’s economic activity and can even liberalize the restrictive norms that govern rural women’s lives. The potential to leverage SHGs to train women to access DFS and help them benefit from this technology is a fruitful area for future research.

 

References

[1] GSMA Policy Spotlight 2023 – India
[2] GMSA India: on the road  to a digital nation 2023
[3] GSMA Mobile Gender Gap Report 2023
[4] Unless stated otherwise, all results reported here are statistically significant using a p-value of 0.10 or lower. This means that similarly conducted surveys of these women would have uncovered these differences in approximately 90 out of 100 cases, which indicates these results are unlikely to have arisen due to random sampling-based variation in results.
[5] Field, Erica, Rohini Pande, Natalia Rigol, Simone Schaner, and Charity Troyer Moore. 2021. “On Her Own Account: How Strengthening Women’s Financial Control Impacts Labor Supply and Gender Norms.” American Economic Review, 111 (7): 2342-75.

Anwesha Bhattacharya, Erik Jorgensen, Urvi Naik, Aruj Shukla, and Charity Troyer Moore.