Gender and credit: an ongoing challenge in the financial system

A recent study conducted in Argentina has revealed significant inequalities in access to credit, particularly when analyzed through the lenses of gender and age.

These gaps reflect the urgent need for more inclusive strategies to achieve true financial equity and harness the economic potential of all segments of the population.

Gender Inequality in Credit Allocation

The report by the consulting firm SIISA indicates that while women represent 51% of credit recipients, they receive only 41% of the total amounts granted. In contrast, over 50% of men applying for financing access the highest credit amounts. This disparity highlights that, despite the increasing participation of women in the financial system, significant barriers persist regarding the amounts awarded, limiting their investment and growth capacity.

This phenomenon is not exclusive to Argentina or Latin America. Globally, women continue to face significant barriers to accessing financing, particularly women entrepreneurs. According to estimates from the World Bank, the financing gap for women entrepreneurs amounts to $1.7 trillion, representing a substantial missed economic opportunity.

Default Rates and Gender

Another aspect highlighted by SIISA is the behavior of default rates. The study shows that, in general:

• 80% of credits are up to date.
• Only 3% have delinquencies of less than 90 days.
• 17% of credits are classified as problematic (with more than three months of delinquency).

This suggests a reasonable recoverability of loans, largely supported by the use of advanced technological tools that allow for efficient credit risk management.

Although the study does not break down default rates by gender directly, previous research in the banking sector indicates that women tend, on average, to have lower default rates than men.

Age-Related Differences

The analysis also reveals significant differences in access to credit based on age:

• 70% of credits are granted to individuals aged 25 to 65, who receive 80% of the total amount.
• Seniors over 65, while representing 22% of credits, access only 18% of the amounts, reflecting a lower proportion of high-value loans in this group.
• Among young people aged 18 to 25, access is even more limited, with only 7% of credits and 2% of the amounts.

Financial institutions consider this segment to be of higher risk, which is reflected in the high default rates: 26% of the credits granted to young people have delinquencies of more than 90 days. This contrasts with the low default levels among seniors, who keep 87% of their credits up to date.

The Crucial Role of Women

In a world where women increasingly play a significant role in economic decision-making, the financial inclusion of this group is essential for economic growth. According to Nielsen projections, by 2028 women are expected to control 75% of discretionary spending globally and manage over $216 trillion in wealth. This immense economic power is not yet reflected in greater inclusion and equity in access to credit.

Women entrepreneurs continue to encounter significant barriers. More than 400 million businesswomen worldwide have the potential to generate economic value and employment, but they face a credit gap that limits their growth. Closing this gap could yield a global economic impact of up to $6 trillion, underscoring the urgency of adopting policies that eliminate gender biases in credit allocation.

Technological Innovation and Bias Elimination

To close this gender gap, the use of advanced technologies and the implementation of equitable credit policies are essential. Alberto Teszkiewicz, Coordinator of Development and Research at SIISA, emphasizes the importance of continuing to innovate tools that can predict and mitigate default risks, ensuring greater stability for financial entities. These technological solutions not only enhance risk management but can also help eliminate biases in loan granting.

Marina Mero, CMO of SIISA, highlights that collaborating to reduce the gender gap is not just a social responsibility but a market opportunity for financial institutions. Those that adopt inclusive solutions will capture a segment with immense growth potential.

As the banking and fintech sectors continue to evolve, it is crucial that credit policies and strategies adapt to be more inclusive, eliminating biases that hinder equitable access to financial resources.

In this regard, technology and data can play a crucial role in building a fairer and more equitable financial future for all.