Access to credit: do laws (really) protect women around the world?



Temps de lecture

3 min


Despite a growing number of legal measures, discrimination against women remains omnipresent throughout the world, and more specifically in terms of access to banking services. In 2008, for example, the Bank of Ghana enacted the Borrowers and Lenders Act, designed to prohibit all forms of discrimination in the allocation of credit. Yet, according to studies carried out by the International Finance Corporation (IFC), only 11% of companies receiving start-up financing are run by women.

In short, in 2018, over 70% of businesses that were in need of financing and run by women in developing countries were unable to obtain credit or were not allocated the amount requested. So, can we really consider that women-friendly legislation protects women’s access to credit?

In a recent study, we examined the effects of the presence of a law prohibiting discrimination in access to credit based on gender on access to credit for women.. We assessed whether these regulations encouraged women to apply for credit and whether the law limited gender selection bias within banking institutions.

Emotional discouragement

We began by observing that, on the demand side, i.e. female applicants for credit, a favorable legal framework substantially increases the number of loan applications from women. Why is this? The literature has repeatedly shown that women are much more risk-averse than their male counterparts. As a result, potential female loan applicants will tend to resign themselves more systematically if they are aware that their chances of being turned down are greater.

Our data also enabled us to identify discouragement explicitly linked to the fear of being turned down for a loan – in other words, emotional discouragement.

Emotional discouragement was also moderated if the country studied had an anti-discriminatory clause: women’s reasoning is more emotionally based and they are more sensitive to peer pressure, and therefore to the probability of receiving a negative response to their application. Women therefore perceive the legal framework as a determining factor in terms of access to credit.

What about the effect of local culture? The results remain similar, even when taking into account the degree of masculinity, i.e. the level of distinction between exclusively female and exclusively male roles. However, we observe that the effect of the legal framework on women’s discouragement can be impacted by the religious context.

Enforcing the law

However, on the supply side, a legal environment favorable to women does not seem to infer in the decision-making of banking institutions. Despite explicit jurisdiction, lenders’ behavior towards female applicants remains unchanged, even taking into account the applicant’s level of risk.

This observation suggests a dichotomy between De jure and De facto. In other words, a gap persists between formal legal requirements and operational reality. This is due to the supposed prevalence of social norms over the current legal framework, resulting from social pressure, or simply from habits.

Even if a population is convinced of the need to enact and apply a law, the latter remains insufficient if no one has a direct interest in acting practically in accordance with it. In such a context, the primacy of the law (commonly referred to as “Rule of Law”) is the only way to determine the level of convergence between the law as passed and its application.

Thus, to counteract the quasi-immutability of conditions of access to credit for women, governments and their judicial bodies should henceforth make it a priority to ensure that enacted laws are enforced.


This is a translated version of the article originally published on the Conversation France.

The original article in French can be viewed here.

Caroline Perrin, Université de Strasbourg and Jérémie Bertrand, IÉSEG School of Management.

Laurent Weill, Professor of Economics and Finance at the University of Strasbourg, supervised the writing of the article that was published in French.

The Conversation

Category (ies)

Economics & Finance




Finance / Banking

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