Women Entrepreneurs Locked Out of Loans: Gender Gap Revealed in GIM Study
GIM study finds women entrepreneurs struggle for loans; digital tools may help close the gap.
A groundbreaking study by the Goa Institute of Management (GIM), published in the prestigious journal Applied Economics, has revealed a significant gender gap in access to formal loans for women entrepreneurs in India’s unorganised sector. The research highlights systemic barriers that disadvantage women-owned enterprises compared to their male counterparts and proposes digital technology as a key tool to bridge this gap.
The study analyzed data from over 400,000 unorganised sector firms, drawn from the 2022-23 National Sample Survey Office (NSSO) Annual Survey of Unincorporated Sector Enterprises (ASUSE). It found clear evidence that women entrepreneurs face substantial challenges in securing credit from banks, government institutions, and other formal financial sources. However, the adoption of digital technologies, such as internet banking and financial services, was shown to significantly reduce this disparity by minimizing information asymmetry and reducing the need for multiple visits to financial institutions.
“Financial institutions are critical for fostering entrepreneurship and job creation in India’s informal sector. Any gender-based disparities in loan access severely limit their potential impact,” said Ashay Kadam, Professor of Banking, Insurance, and Financial Services at GIM. “While digital financial technologies enhance inclusion, we must invest equally in financial literacy to ensure these innovations reach those at the bottom of the pyramid.”
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Swarna Parameswaran, Assistant Professor of Economics, General Management, and Public Policy at GIM, emphasized the transformative potential of digital tools. “Access to formal finance is vital for the growth of women-owned enterprises. Digital banking and financial services offer a promising solution to mitigate the financial constraints faced by women entrepreneurs,” she said.
The researchers recommend that banking policies be re-evaluated to address gender disparities in credit access. They also advocate for targeted government schemes and funding to promote digital technology adoption among women-owned enterprises in the unorganised sector. By increasing awareness and encouraging the use of digital financial services, these measures could significantly alleviate the barriers faced by women entrepreneurs, fostering greater economic inclusion and empowerment.
