Financial Literacy and Access to Finance to Women Entrepreneurs

Significant literature has identified financial inclusion as an important factor in poverty reduction, inequality and achieving high inclusive economic growth. Several studies have showed that financial inclusion impacts poverty and income inequality and higher levels of financial inclusion lead to lower poverty and income inequality. Latest figures from the Global Findex database reveal that, globally, the number of adults with an account at a financial institution was 51% in 2001, and increased to 64% in 2017. Overall, in 2017, 72% of men and 65% of women had an account at financial institution; in developed countries the gap between men and women ownership of accounts is marginal, however in developing countries about 41% of women still do not have access to accounts.

Women entrepreneurs too have poor access to finance. Several studies have highlighted that in comparison to male entrepreneurs, women-owned small & medium enterprises face several barriers in accessing finance. The barriers are both from supply (financial institutions) and demand side (user perspective). Among demand side barriers low financial literacy of women compared to male entrepreneurs is often cited as one of the factors limiting their access to financial services. This project aims to understand access of finance to women entrepreneurs. In particular, it seeks to understand how financial literacy levels impact access of finance to women entrepreneurs. Improved financial literacy will enable women entrepreneurs to make informed choices on financial products and services leading to increased access to financial services, investment, output and economic growth. The project findings will have policy implications for policy makers to make informed decisions on emphasising financial literacy and reducing constraints in accessing finance. Using mixed methods approach, both primary and secondary data this study aims to focus on South Asian countries particularly India.