OECD Report: Ending Gender Bias in Finance is the Key to Unlocking 6-12% Economic Growth
SDG 5: Gender Equality | SDG 8: Decent Work and Economic Growth
Institutions: Ministry of Finance | NITI Aayog | Ministry of Women and Child Development
The OECD report, Bridging the Finance Gap for Women Entrepreneurs, delivers a critical diagnosis of why women-led businesses are routinely denied the capital necessary to start and scale, and outlines a comprehensive policy blueprint to unlock this untapped economic potential.
The Finance Gap and the Economic Cost
The report establishes that access to finance remains the single greatest barrier for women entrepreneurs globally, creating a substantial drag on economic growth.
The Problem: Despite women being about 75% as likely as men to start a business in OECD countries, survey data consistently shows that they are approximately half as likely as men to obtain a business loan from a bank. This disparity is most acute in the high-growth sector, where women-led companies receive only about 2% of total venture capital investments.
The Policy Urgency: This is not just a social issue; it is an economic inefficiency. The OECD estimates that closing the gender gap in entrepreneurship could generate a massive economic boost, potentially adding between 6% and 12% to the GDP of member economies.
Evidence of Systemic Bias and Market Failure
The report meticulously details the evidence behind the financing gap, attributing it to interconnected failures on both the supply and demand sides of financial markets:
Supply-Side Bias: Financial institutions exhibit unconscious bias and stereotyping in their lending processes, often questioning women’s commitment or demanding more collateral and higher interest rates than they do for men with comparable business plans. This institutional failure is often compounded by a severe under-representation of women in investment decision-making roles.
Demand-Side Constraints: On the entrepreneur’s side, women typically start businesses with less initial capital, operate in traditionally smaller or less profitable sectors, and are more reluctant to assume debt, partly due to lower self-confidence or a lack of strong professional networks compared to their male counterparts.
Policy Roadmap for Change (The Action Plan)
The report calls for governments to move beyond fragmented, symptom-oriented programs toward a holistic policy framework that addresses these structural causes:
Targeted Financing: Scale up existing measures like loan guarantees and explore new solutions, particularly FinTech innovations, to better reach and serve diverse segments of women entrepreneurs.
Skills and Literacy: Boost digital financial literacy and provide complementary, non-financial support such as leadership, mentorship, and management training to build women’s confidence and capacity for growth-oriented scaling.
Institutional Reform: Directly tackle unconscious bias and promote greater gender diversity among lenders and investors, while increasing the availability of granular, verifiable data to demonstrate the strong business case for funding women-led firms.
Follow the full report here: Bridging the Finance Gap for Women Entrepreneurs