NEW STUDY | Bank account can be the starting point for women’s entrepreneurship

Opening a bank account can make a big difference for low-income women who want to start their own business. That’s according to a study from rural Bangladesh – but the effect is strongly dependent on another factor.

Women’s entrepreneurship has long been seen as a way out of poverty. In the past, many have hoped that microfinance, in the form of small loans, would empower women to start and run businesses. However, the effects have been limited. In the new study, researchers instead tested whether access to formal banking services – a regular bank account – can give women greater financial freedom and more opportunities to become entrepreneurs.

A total of 577 low-income women from rural Bangladesh participated. Half were allowed to open a bank account without fees for two years, while the other half were not. The women in both groups lived in two different communities: one where gender norms are very restrictive and one where they are more equal.

Difference between equal and unequal societies

The results show that those who opened a bank account were more likely to start a business than the control group. They also learned more about money management, became better at identifying business opportunities and gained more confidence in their own abilities. But in societies with strong gender norms, the impact was weaker – where women’s agency was still limited by social expectations.

The researchers argue that access to a bank account is an important piece of the puzzle, but not the whole solution. For women to fully benefit from financial inclusion, attitudes and norms in society also need to change. When economic opportunities are combined with social support and gender-equal norms, women’s entrepreneurship can become a real force for development and poverty reduction.

More about the study and the authors
The article Financial inclusion and low-income women’s new venture initiation: A Field experiment is published in the scientific journal Journal of Business Venturing. The authors are Zafar M. Shahriar, Monash University, Australia and Sarah R. Chase and Dean Shepard both at the University of Notre Dame, USA.

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