Women and Microfinance in the U.S

American women are poorer and more excluded than men . . . and are also a very promising business investment . . .

Why do many microfinance organizations in the U.S. work so hard to involve female borrowers? Many resourceful, smart, and enterprising American women are becoming self-sufficient through small businesses and have already proven they can excel in the competitive business world once dominated by men. So why would they need a leg up?

Because things are still far from fair. Most women remain outsiders to the financial sector, and do not have access to the same opportunities in the labor market that men do. These injustices can only be remedied with good programs and lots of time.

Women get a raw deal in finances because they lack experience. A story in the New York Times reported that although women generally have better credit scores, they are 32% more likely to carry high-interest mortgages than men with similar incomes. Experts from the Consumer Federation of America speculated that the reason for the disparity is that women are less familiar with the mortgage market, so they don’t feel comfortable shopping around for the best deal. African American women are particularly likely to have subprime loans, because they have traditionally been outsiders to matters of finance. Not knowing the ins and outs of the system can cost them big time.

Women are tracked into jobs that pay less. Just one of the reasons they tend to be poorer.

Women are more likely to be poor than men. In 2007, there were about 25% more American women living below the poverty line than there were men. This has a lot to do with the job market: Women are sometimes paid less than men, even when they do the same job for the same number of hours. Also, women are tracked into “pink collar” jobs like teaching, nursing, waitressing, and cleaning, which tend to be low-paying. Women also spend more time than men giving unpaid care for family members, and are more likely to bear the costs of raising children.

Women repay their loans. A hot-off-the-press working paper by D’Espallier, Guérin, and Mersland shows that for 350 MFIs studied, “more women clients is associated with lower portfolio-at-risk, lower write-offs, and lower credit-loss provisions, ceteris paribus.”