How women are driving change in finance and entrepreneurship

In India, women lead 20.37% of micro, small, and medium enterprises (MSMEs), yet the International Finance Corporation (IFC) estimates an unmet credit demand of over $11.4 billion for women-led businesses. This financing gap is part of a broader structural issue in the Indian economy, where capital allocation has historically prioritised larger corporations over small and medium enterprises. However, women-led businesses have demonstrated notable economic potential. For example, research shows that women-led startups deliver significantly higher revenue per dollar of funding compared to those led by men, reflecting a more efficient use of resources. This data highlights the importance of addressing the systemic barriers that restrict women’s access to finance.

Women's credit behaviour provides further evidence of their potential as key actors in financial systems.

It is an open secret that when it comes to funding women, we do not follow what the data tells us.

Studies consistently indicate that women borrowers are more reliable, with lower default rates than men. This reliability has encouraged financial institutions to increasingly target women borrowers, recognising them as a stable and dependable segment. Expanding access to credit for women not only improves financial inclusion but also enhances the overall health of financial systems.

The economic impact of increasing women’s participation extends beyond the individual level. The relationship between female labour force participation and economic growth has been well-documented. In India, for instance, achieving gender parity in labour force participation could raise gross domestic product (GDP) by 27%, contributing an additional $770 billion to the economy. This is not an isolated phenomenon; countries with higher rates of female labour force participation also tend to have stronger economic performance, as measured by GDP per capita. Women’s participation enhances productivity, broadens the talent pool, and stimulates innovation, all of which contribute to economic growth.

Women’s involvement in financial decision-making is also changing the way financial systems operate. The World Economic Forum’s Global Gender Gap Report notes that greater gender diversity in leadership improves risk management and fosters stability. Companies with more women in decision-making roles have demonstrated better financial performance, underscoring the economic value of diversity. In finance, where decision-making has long been dominated by men, the inclusion of women brings fresh perspectives that contribute to more balanced and effective outcomes.

The connection between women’s participation in finance and broader social progress is equally significant. Access to finance empowers women, enabling them to invest in businesses, education, and health. Studies have shown that women are more likely than men to reinvest their earnings into their families and communities, amplifying the impact of their economic activities. For example, in sub-Saharan Africa, women’s savings groups have increased household earnings by an average of 20%, demonstrating how financial inclusion can drive social and economic improvements simultaneously.

Despite these clear benefits, systemic barriers persist. Women face challenges ranging from cultural norms and biases to structural issues such as limited access to collateral and formal credit histories.

Addressing these barriers requires targeted policy interventions and innovative financial models that prioritise inclusivity. For instance, microfinance institutions and peer-to-peer lending platforms have begun to fill the gap by providing women with alternative sources of credit. These models leverage technology and data to assess creditworthiness, enabling access for women who might otherwise be excluded from traditional financial systems.

The economic rationale for greater inclusion of women in finance and entrepreneurship is compelling. As Nicole Casperson has noted, the benefits of gender equality in finance extend beyond individual gains, contributing to broader economic and social progress. The inclusion of women leads to more equitable resource distribution, higher productivity, and stronger economic resilience. These outcomes are not only desirable but essential for achieving sustainable development.

In summary, the increasing participation of women in finance and entrepreneurship is reshaping these sectors in fundamental ways. Women’s contributions enhance efficiency, foster innovation, and drive economic growth. However, realising the full potential of their participation requires dismantling the barriers that limit their access to resources and opportunities. Addressing these challenges is not only a matter of fairness but also a pragmatic economic strategy that benefits society as a whole. Gender equality in finance and entrepreneurship is not simply about closing gaps; it is about unlocking the untapped potential that women bring to the table. The good news is that we are seeing this problem diminish, more women-run enterprises are designing for women, creating a virtuous cycle and hopefully closing this gap over the next decade.

This article is authored by Neha Juneja, co-founder & CEO, IndiaP2P.