Digital Financial Services for Women’s Economic Empowerment: Review of Evidence of the Causal Mechanisms

The framework focuses on two broad categories of mechanisms through which DFS can increase women’s economic empowerment. First, DFS can increase WEE by improving women’s outside options and thus her bargaining power.  Second, DFS can increase a woman’s ability to enact her preferences in other ways (without changing her outside option). Digital finance can economically empower women through several pathways, some of which are- addressing the cultural constraints, improving the efficiency of accessing financial services, enabling service providers better target female clients, and increasing the bargaining power of women. The paper found that there are many gaps in the understanding of the causal mechanisms from DFS to WEE. While research on disentangling the specific mechanisms discussed thus far needs to be prioritized, the paper concludes with a few general questions that are relevant to all the mechanisms –a) the role of contextual factors, more specifically digital literacy, b) complementarity in DFS mechanisms, and c) the importance of measuring downstream outcomes of WEE.

Authors: Garz, Seth; Heath, Rachel; Kipchumba, Elijah; Sulaiman, Munshi
Type: White Paper