83048 Women, Mapping the Legal Gender Gap in Using Business and the Law Property and Building Credit by Nayda Almodóvar-Reteguis, Khrystyna Kushnir, and Thibault Meilland In 2009 Rebecca Moore earned her living as a clothing Shehzad Noorani/World Bank trader in the northern Liberian town of Ganta. As part of Liberia’s efforts to create jobs after years of conflict, Main Findings the government focused on increasing access to loans for small businesses. But in an economy where women account for 80 percent of market traders, Moore and many other entrepreneurs could not access the financing they needed to expand their small businesses. There was a mismatch between the types of assets that Moore and her colleagues possessed and what banks would accept as collateral. Most Liberian banks require evidence of home ownership as collateral for loans. And for married women, comply- ing with this requirement can be problematic. As Moore put it, “We find it difficult to convince our husbands and partners to allow us to use our houses for collateral. They Shehzad Noorani/World Bank Eric Miller/World Bank are always skeptical” (IRIN 2009). But Liberia is one of the few economies in Sub-Saharan lives. Covering 141 economies, the dataset establishes six Africa where the public credit registry collects information indicators of gender differences in formal laws and institu- on smaller loans including those from microfinance insti- tions: accessing institutions, using property, getting a job, tutions. This helps women build reputation collateral—one providing incentives to work, going to court, and building way to get around the mismatch between the types of credit. Women, Business and the Law finds that only 38 assets that women have and the types that banks accept. of the economies covered set out equal legal rights for women and men in 45 key areas across all indicators. How Does Legislation Affect Women’s Access to Capital? In particular, two of the indicators examine some of the When seeking a loan, women and men can encounter legal and regulatory prerequisites needed to access and many obstacles when they do not possess the right types leverage property as collateral and to build credit histories: of assets to pledge as collateral. In developing countries, • Using property analyzes women’s ability to access banks often prefer to use immovable assets, such as land and use property based on their capacity to own, and buildings, as security interests. So women, who tend manage, control, and inherit it. to have less access to such assets, can have more diffi- • Building credit identifies minimum loan thresholds in culty securing loans. The problem is worse where there are private credit bureaus and public credit registries and gender-differentiated property rights. tracks bureaus and registries that collect information The World Bank Group’s Women, Business and the Law from microfinance institutions. dataset examines where the law treats women and men The findings and analysis from these two indicators form differently in ways that may affect women’s abilities and the basis of this note, which is part of a series examining incentives to get jobs and start and run businesses—one the legal gender gap using the Women, Business and the of many factors that determine the course of their working wbl.worldbank.org Mapping the Legal Gender Gap in Using Property and Building Credit 1 Law dataset. Other notes examine the legal gender gap in The findings and analysis from Women, Business and the accessing institutions and getting a job. Law’s using property and building credit indicators suggest that laws and regulations in very different areas matter Though many factors influence women’s ability to use for women’s access to capital. The links between these property and build credit, this analysis suggests that the areas include the ability to use the types of assets that laws governing property relationships also matter; for women have—including immovable property, movable example in economies where there is a legal gender gap as property, and credit histories—and how they can be used measured by Women, Business and the Law’s using property as collateral. indicator, women borrow less from financial institutions than in economies with legal gender parity. This suggests Using property: what we measure and why it that the gender gap may prevent women from using prop- matters for women erty as collateral for loans. The ability to acquire, access, manage, and control prop- Even where direct legal restrictions on women do not exist, erty—in short, the ability to use property—is important laws may not facilitate women’s full economic participa- to everyone regardless of their gender. Ownership and tion—for example, the use of movable assets (inven- control of land or housing provide direct and indirect tory, equipment, accounts receivable) for loans. In many benefits to individuals and households. Moreover, strong economies women’s ownership of immovable assets such property rights and titling encourage lending based on as land can be very low, and women might find it easier these assets as collateral (de Soto 2000). This can help to access and own moveable assets. By not taking into people access finance for consumption or investments account information on microloans and small conventional (Sabarwal and Terrell 2009). loans, credit registries and bureaus are missing valuable Owning property is particularly important for women in data on women’s creditworthiness. low-income economies, where entrepreneurship offers a Promoting women’s access to capital through prop- chance to break the poverty barrier. Their odds to increase erty rights and expanded bases for credit gives them more business productivity greatly depend on how much prop- opportunities for financial independence. This commit- erty they own and how they can use it (Mammen and ment is reflected in international human rights instruments Paxson 2000). But several studies show regional and local such as the United Nations Convention on the Elimination gender asset gaps in property ownership, particularly on of All Forms of Discrimination against Women (CEDAW). major assets (Deere and León 2003, Quisumbing and Table 1 shows how Women, Business and the Law’s indica- Hallman 2005, Deere and Doss 2006). tors correspond with CEDAW. In developing economies this gender asset gap can under- Identifying legal and regulatory impediments to women’s mine women’s bargaining power and capacity to engage access to capital, as well as processes that can facilitate in economic activity because access to formal credit relies it, is a first step toward improving women’s economic heavily on asset-based lending (IFC 2011). For example, opportunities. Once gender equality is reflected in the law, a recent survey of Ghanaian banks shows that they have efforts can turn to implementation. a strong preference for land and buildings as collateral. Table 1 WOMEN, BUSINESS AND THE LAW TOPICS AND CORRESPONDING HUMAN RIGHTS UNDER CEDAW Women, Business and the Law category Main Corresponding Human Rights of Women (CEDAW) Using Property Equal rights to administer property ( Art. 15) Equal rights in all matters relating to marriage and family relations (Art. 16.1), including same rights for both spouses in respect to ownership, acquisition, management, administration, enjoyment and disposition of property (Art. 16.1h) Building Credit Access to bank loans, mortgages and other forms of financial credit on equal basis with men (Art. 13b) Access to agricultural credit loans for rural women (Art. 14.2g) 2 Mapping the Legal Gender Gap in Using Property and Building Credit wbl.worldbank.org Lower-value equipment, book debts, accounts receivable, name of both spouses as the default option. Because titled and household goods are far less likely to be accepted land is often banks’ preferred form of collateral, having as security interests (Law and Development Partnership women’s names on land titles can be important for their 2011). ability to access finance. Accordingly, lenders’ preferences for certain assets can The data show more restrictions for this indicator apply to have a disproportionate impact on women borrowers. married than unmarried women. None of the economies Land-poor borrowers are at a disadvantage, so women’s covered makes any legal distinction between unmar- reduced access to immovable assets limits their access to ried women and unmarried men when it comes to their credit. And women entrepreneurs tend to be engaged in rights to moveable and immoveable property. So for both Main Findings micro, small, and medium-size businesses, where assets men and women, it is useful to assess property rights in are often movable and of lower value (IFC 2011). conjunction with marital status (box 2). Laws and regulations can help expand the range of assets Joint titling of marital property that banks accept as collateral—benefiting owners of Marriage under full or partial community of property micro, small, and medium-size businesses regardless of has the implicit effect of granting ownership over the their gender (box 1). marital estate to both spouses in equal shares. Under full Women, Business and the Law’s using property indicator community of property, this includes property brought to examines women’s legal ability to acquire, access, manage, the marriage by each spouse. Joint titling of the property and control property in four areas: marital property shared by the spouses is presumed under both regimes. regimes, joint titling, rights over movable and immovable This presumption can provide married women with access property, and inheritance. to a greater pool of titled property as collateral. Because the marital property regime governs a variety Recognition of nonmonetary contributions and its of property transactions, the answers to this topic are importance for women’s property rights clustered in accordance with the default marital property Being able to secure property ownership upon dissolution regime in each economy. For example, the marital prop- of marriage is essential for women’s access to collateral. erty regime determines whether property is titled in the Nonmonetary contributions are crucial, including things Box 1 Reforming secured transactions systems can increase women’s access to capital Business owners in developing economies are often discouraged from seeking formal loans because banks consider their assets insufficient or unsuitable. The mismatch can be particularly severe for women. An efficient secured transaction system can help bridge this gap. In the United States small businesses secure 70 percent of their financing against movable assets. By comparison, nearly 90 percent of movable assets that can be pledged as collateral to U.S. banks would likely be rejected by Nigerian banks. Reform of the secured transactions framework could address lender concerns and increase borrower abilities to leverage assets. Collateral law should allow security interests in all types of movable assets, whether tangible—such as livestock, crops, inventory, and equipment—or intangible—like accounts receivable. It should also recognize both possessory and non-possessory interests so that productive assets can secure loans and help generate the income needed to repay them. A centralized collateral registry can enable lenders to record their security interests and claim priority over assets pledged by clients. Rapid enforcement mechanisms such as out-of-court procedures should allow lenders to take and sell pledged assets quickly in case of default. Following these principles, China recently completed a wide-ranging reform of its secured transactions system. In 2007 it enacted a new Property Law and established a centralized security interest registry. The new framework enabled small and medium-size enterprises to leverage a broader set of movable assets and helped female-owned businesses. Nearly two-thirds of the enterprises surveyed that leveraged accounts receivable due to the reform had female ownership, and 20 percent were majority owned by women. Source: Dalberg Global Development Advisors 2011, World Bank 2011a, Safavian, Fleising and Steinbuks 2006, World Bank 2010. wbl.worldbank.org Mapping the Legal Gender Gap in Using Property and Building Credit 3 such as caring for children, maintaining the home, and Most economies in Latin America and the Caribbean subsistence agriculture. Women typically have fewer grant spouses equal rights to property. Chile and Ecuador monetized contributions than men and thus fewer assets are the exceptions. In Chile the husband legally manages during marriage (World Bank 2011c). marital property—including any property generated in the marriage—and any property brought into the marriage by These contributions are recognized—or not—depending his wife. The wife can keep any earnings that she gener- on the marital property regime. Under separation of prop- ates from work if she can show that they came from her erty, at dissolution, each spouse will leave with their sepa- own job. This hybrid model represents a partial move away rately titled assets. This can result in women losing access from the husband’s “marital power,” a concept derived to productive assets such as land, real estate, and motor from the 1855 Chilean Civil Code. While there have been vehicles unless nonmonetary contributions are recognized. several attempts since the 1980’s to equalize administra- Conversely, under full or partial community, as well as tive rights over marital property, they have been unsuc- deferred full or partial community regimes, nonmonetary cessful (Barros 1991, Corral 2007). Ecuador has the same contributions are implicitly recognized at dissolution restriction as the Philippines. because assets are distributed equally between spouses (World Bank 2011c). Four economies in Sub-Saharan Africa give husbands sole administrative control over marital property: Cameroon, Findings by region in using property Côte d’Ivoire, the Democratic Republic of Congo, and All economies in high-income OECD, Eastern Europe and the Republic of Congo. In these economies husbands Central Asia, the Middle East and North Africa, and South manage marital property, and financial institutions require Asia grant equal rights to men and women in property husbands’ approval to use property as collateral. ownership. Inheritance rights in 26 economies differentiate between In East Asia and the Pacific, only the Philippines restricts women and men. This includes all economies covered in married women’s property rights. Spouses have the same the Middle East and North Africa, seven in Sub-Saharan ability to administer property, but if they disagree on its Africa (Burundi, Guinea, Mali, Mauritania, Senegal, Sudan, disposition, the husband prevails. and Tanzania), three in South Asia (Bangladesh, Nepal, and Pakistan) and two in East Asia and the Pacific (Indonesia and Malaysia). Box 2 The importance of where couples are married Sheryl Sandberg, chief operating officer of Facebook, said in 2011 that “the most important career choice you’ll make is who you marry” (Groth 2011). Women, Business and the Law data show that where you marry is also important for women. The default marital property regime—the one that governs the property relationship of every married couple unless they opt for an alternative—defines how each spouse can use, buy, or sell property. The structure of marital property regimes might help to explain gender gaps in access to capital outcomes for women. Across the economies covered in Women, Business and the Law, there are four common marital property regimes (table 2): • Separation of property—all property acquired by the spouses before they marry, as well as all property acquired during the marriage, remains separate property. Each spouse has sole control of their assets under this regime. • Partial community of property—assets acquired before marriage are considered the property of the acquirer. Assets and income acquired by either spouse during marriage, apart from inheritance or gifts to one spouse, are considered joint property. At the time of dissolution, each spouse retains ownership of their assets. Assets considered part of the community are divided equally. • Full community of property—all assets and income brought into the marriage, as well as those acquired during it, apart from inheri- tance or gifts to one spouse, are considered joint property. A full community regime implicitly recognizes nonmonetary contribu- tions to the marriage and grants spouses joint rights to property. • Deferred full or partial community of property—all property acquired before and during marriage remains the property of the acquirer and each spouse has sole control of their productive assets during marriage. On dissolution, the assets are divided equally. 4 Mapping the Legal Gender Gap in Using Property and Building Credit wbl.worldbank.org Why do gender differences in using property where property ownership and inheritance rights are matter for accessing capital? gender differentiated (figure 1). Restrictions on women’s ability to acquire and use prop- Restrictions in using property limit women’s prospects erty affect outcomes. Analysis shows that women borrow to have savings, investments and sufficient collateral less from financial institutions in economies with a legal for loans. Thus, restricted property rights limit women’s gender gap in using property. On average, there are 9 access to capital by means of credit and equity. percentage points fewer women with loans in economies Main Findings Table 2 Default Marital Property Regimes: A Regional Perspective Deferred Full or Separation Full Community Partial Community Partial Community Other Region Economies East Asia & Fiji, Hong Kong SAR, China, Philippines Cambodia, China, Indonesia, Taiwan, China Mongolia, Pacific Malaysia, Papua New Guinea Lao PDR, Thailand, Vietnam Singapore Eastern Albania, Armenia, Azerbaijan, Latvia Europe & Belarus, Bosnia and Central Asia Herzegovina, Bulgaria, Croatia, Georgia, Kazakhstan, Kosovo, Kyrgyz Rep., Lithuania, Macedonia FYR, Moldova, Montenegro, Romania, Russian Federation, Serbia, Tajikistan, Turkey, Ukraine, Uzbekistan Latin Jamaica Argentina, Bolivia, Brazil, Chile, Colombia, Costa America & Dominican Republic, Ecuador, Rica, El Salvador, Caribbean Guatemala, Mexico, Paraguay, Honduras, Peru, Puerto Rico (U.S.), Nicaragua, Panama Uruguay, Venezuela, RB Middle East Algeria, Egypt, Arab Rep., Iran, & North Islamic Rep., Jordan, Kuwait, Africa Lebanon, Morocco, Oman, Saudi Arabia, Syrian Arab Rep., Tunisia, United Arab Emirates, West Bank and Gaza, Yemen Rep. OECD Australia, Ireland, United Netherlands Belgium, Canada, Czech Rep., Austria, Denmark, Japan, Kingdom Estonia, France, Hungary, Finland, Germany, United Italy, Korea, Rep., New Zeland, Greece, Iceland, States Poland, Portugal, Slovak Rep., Israel, Norway, Slovenia, Spain Sweden, Switzerland South Asia Bangladesh, India, Nepal, Pakistan, Sri Lanka Sub-Saharan Benin, Botswana, Gabon, Ghana, Burundi, Namibia, Angola, Burkina Faso, Niger Africa Guinea, Kenya, Liberia, Malawi, Rwanda, South Cameroon, Chad, Congo, Dem. Mali, Mauritania, Nigeria, Africa Rep., Congo, Rep.,Côte d’Ivoire, Senegal, Sudan, Tanzania, Togo, Ethiopia, Lesotho, Madagascar, Uganda, Zambia, Zimbabwe Mauritius, Mozambique Source: Women, Business and the Law (2012) Note: “Other” describes economies where the four categories do not accurately describe the default regime. So, for example, in the United States, where Women, Business and the Law methodology looks at the law applicable in the main business city, New York law prescribes an “equitable” distribution of property— calling for a fair, but not necessarily equal distribution. Before the doctrine of equitable distribution was adopted, separation of property was the default regime and property would go to the titleholder. wbl.worldbank.org Mapping the Legal Gender Gap in Using Property and Building Credit 5 women with an account at formal financial institutions, Figure 1 More women have loans in than in economies with a default separation of property economies that grant women the same property rights as men regime (figure 3).1 One reason could be that under regimes where nonmonetary contributions are implicitly taken into account women have access to more assets than those With legal gender parity With legal gender gap in using property in using property they acquire themselves. However, women under a sepa- ration of property regime must rely solely on assets they earn themselves, as well as their bargaining power within 47% 38% Female the household, in order to access capital. 53% 62% Male Another explanation is that gender parity in account owner- ship at a formal financial institution in economies with a full community of property regime could be due to more joint accounts between wives and husbands. Generally, under Sources: Women, Business and the Law 2012 and Global Financial Inclusion (Global Findex) Database. full and partial community regimes, married couple’s bank Note: The figure includes data on 132 economies and presents an accounts are jointly owned. Available data do not allow average value. disaggregating joint accounts from individually owned accounts.2 Restrictions on women’s legal ability to own, sell, acquire, Building credit: measuring women’s ability to and use property as collateral also diminish their prospects build credit histories to start and run businesses. Owning a profitable busi- ness is one of the main ways to create and raise capital. Establishing a good credit history may help women who Economies with more restrictions on women’s property lack access to property they can use as collateral for loans. rights have 8 percentage points fewer firms with female Lenders rely on credit histories to distinguish diligent participation in ownership, relative to economies without clients from those with late payment records or default- such restrictions (figure 2). ing loans. Borrowers who build and maintain good credit histories are rewarded with enhanced reputation collateral, In economies with a default full community of property giving them the ability to borrow larger amounts (Miller regime, there are on average 8 percentage points more 2003). Because women often lack the types of assets Figure 2 In economies with equal property rights for men and women, there are more firms with female participation in ownership. 36% 40% With legal 28% 30% gender parity in using property With legal 20% gender gap in using property 10% 0% Source: Women, Business and the Law 2012 and Enterprise Surveys. 6 Mapping the Legal Gender Gap in Using Property and Building Credit wbl.worldbank.org accepted by banks, enhanced reputation collateral can Owning a credit card is one way to build a credit history. help them in obtaining credit extensions or applying for Analysis shows that marriage can affect credit card owner- new loans (CGAP 2011). ship rates among women. For example, in the covered economies, on average 22 percentage points more women However, women may face difficulties when it comes to own credit cards where marital property is managed by being included in the credit reporting system at all. For both spouses (figure 4). If both spouses manage marital example, they may lack the requisite identification docu- property, each of them has access to larger amounts of ments required by bureaus and registries to be included capital via each other’s property. This use of joint property in their records. Women are also more likely than men as collateral would enable them to build their individual to lack traditional banking relationships (Demirguc-Kunt credit. Main Findings and Klapper 2012). This can keep them outside of the reach of credit reporting systems. Where information There are several ways borrowers can build their credit. from non-bank institutions is used to assess individuals’ Women, Business and the Law’s building credit indicator creditworthiness, it may help women who lack tradi- measures two ways which may be beneficial for women tional banking relationships. An example of this is Rwanda, entrepreneurs, given their concentration in micro, small, where two mobile phone companies and an electricity and and medium-size businesses and as microfinance clients gas company have shared information with the country’s (IFC 2011). credit bureau since April 2011 (World Bank 2011a). First, it identifies the threshold for loans reported by Historically, holding joint accounts with husbands may private credit bureaus and public credit registries. Higher have affected women’s ability to build credit histories. loan thresholds are more likely to exclude the smaller In the United States, for example, the 1974 Equal Credit businesses where women entrepreneurs are concentrated Opportunity Act was a major step forward for married from the credit reporting system (IFC 2011). Second, the women, enabling them to keep accounts and build credit indicator tracks bureaus and registries that collect infor- histories in their own names (Federal Reserve Bulletin mation from microfinance institutions. Where information 1977). Before that, credit bureaus would often carry only a on the repayment of micro-loans is captured in credit husband’s name on joint accounts—and upon separation, bureaus and registries, it gives micro-borrowers, many of divorce, or the death of their husband, women would lack whom are women, the ability to build reputation collateral. individual credit histories. This problem may still persist in They can then leverage this collateral to access larger loans some economies. and graduate to conventional finance. Figure 3 ACCOUNT AT A FORMAL FINANCIAL INSTITUTION BY GENDER AND MARITAL PROPERTY REGIME 100 80 60 51% 54% 59% Female owned accounts 40 46% 49% Male owned accounts 41% 20 0 Separation Partial community Full community of property of property of property Source: Women, Business and the Law 2012; and Global Financial Inclusion (Global Findex) 2012 database. Note: The figure includes data on 112 economies and presents an average value. wbl.worldbank.org Mapping the Legal Gender Gap in Using Property and Building Credit 7 Women, Business and the Law will seek to expand its building reporting is equal to over 6 times income per capita in credit indicator to better capture other important dimen- both economies. In South Asia, Bangladesh and Nepal sions of credit reporting for women, such as identification have minimum loan thresholds equal to 109% and 6,319% requirements, the treatment of joint-account holders and of income per capita, respectively. Of the 26 Sub-Saharan the reporting of non-bank information. African economies where credit bureaus or registries exist, 16 report loans at or below 1 percent of income per capita. Findings by region in building credit In other economies in the region, bureaus and registries set All 39 high-income economies covered in Women, Business minimum loan thresholds as high as 20 times income per and the Law have at least one private credit bureau or public capita (Côte d’Ivoire), almost 30 times income per capita credit registry, while 88 of the 102 middle and low-income (Niger) and over 40 times income per capita (Ethiopia). economies covered do so. All economies covered in the While conventional finance is widely available to women Middle East and North Africa and South Asia regions have in OECD high-income economies, microfinance often at least one credit bureau or registry. Among economies offers a crucial alternative for women borrowers in other covered in Eastern Europe and Central Asia, only Tajikistan regions. In many of them, women borrowers make up the lacks a credit bureau or registry, while in Latin America majority of microfinance clients (table 3). and the Caribbean, Jamaica and Venezuela, RB do so. In the East Asia and Pacific region, Cambodia and Lao PDR Women, Business and the Law finds that among the 18 econ- lack credit bureaus and registries. In Sub-Saharan Africa, omies covered in Latin America and the Caribbean where 26 of the 35 economies covered have at least one credit credit bureaus or registries exist, 15 economies allow bureau or registry. micro-borrowers to build credit histories (figure 5). Client records from microfinance institutions are also reported Among the 127 economies where credit bureaus and in about half of the economies covered in East Asia and registries exist, the majority set minimum loan thresh- the Pacific, the Middle East and North Africa, and Eastern olds at or below 1 percent of income per capita. In Latin Europe and Central Asia. America and the Caribbean, East Asia and the Pacific and Eastern Europe and Central Asia, loans at or below 1 In South Asia, only India and Pakistan offer opportunities percent of income per capita are reported in all economies to micro-borrowers to build credit histories. In Sub-Saharan where credit bureaus and registries exist. All high-income Africa, where 9 of the 35 economies covered lack credit OECD economies do so as well, except for Slovenia. Most reporting systems, only Liberia, Mozambique, Namibia, economies with credit bureaus and registries covered in Rwanda, South Africa and Zambia enable microfinance the Middle East and North Africa region report loans at institutions to share information with credit bureaus and or below 1 percent of income per capita except for Algeria registries, allowing micro-borrowers to build a credit history. and Jordan, where the minimum loan threshold for credit Figure 4 In economies where both spouses manage marital property, more women have credit cards In economies where both spouses manage marital property regardless 91 of who is the original owner In economies where one spouse, who is the original owner, 69 manages marital property 20 40 60 80 100 0 Number of female credit card owners per 100 male credit card owners Sources: Women, Business and the Law 2012 and Global Financial Inclusion (Global Findex) Database. Note: The figure includes data on 123 economies and presents an average value. 8 Mapping the Legal Gender Gap in Using Property and Building Credit wbl.worldbank.org Table 3 Microfinance borrowers by region Share of female borrowers Region (number of economies) Active borrowers Female borrowers (percent) East Asia & Pacific (14) 16,244,000 8,663,000 53 Eastern Europe & Central Asia (20) 2,398,000 811,000 34 Latin America & Caribbean (22) 16,518,000 8,482,000 51 Middle East & North Africa (9) 2,212,000 1,335,000 60 South Asia (7) 58,138,000 51,806,000 89 Main Findings Sub-Saharan Africa (35) 5,299,000 2,826,000 53 Total (107) 100,809,000 73,923,000 73 Source: Mix Market Database 2010. (http://www.mixmarket.org/mfi/indicators). Note: The number of active borrowers includes men, women, and institutional borrowers. Only microfinance institutions that provide gender disaggregated data are included. Economies covered in this database do not match all those in the Women, Business and the Law 2012 database. Reforming laws and regulations to help women registries were established in Ghana, Moldova, Papua access capital New Guinea, the Syrian Arab Republic, and Uganda. Regulatory reforms affecting credit bureau and registry Other economies lowered the minimum loan amounts rules can benefit women entrepreneurs by improving their covered by their credit bureaus and registries, allowing capacity to build reputation collateral. Women, Business coverage of smaller loans to be included. Jordan cut its and the Law finds that between June 2009 and March 2011, minimum loan amount by a third, Mauritania cut its by 11 economies implemented reforms in the areas covered half, and Yemen eliminated its altogether, allowing loans of by the building credit indicator. New credit bureaus and any size to be covered. And Azerbaijan’s micro-borrowers can now build credit histories through local credit bureaus. Figure 5 ECONOMIES WHERE MICROFINANCE INSTITUTIONS PROVIDE INFORMATION TO CREDIT BUREAUS AND REGISTRIES, BY REGION Sub-Saharan Africa (26 economies) 23 South Asia (5 economies) 40 Middle East & North Africa (14 economies) 50 Eastern Europe & Central Asia (22 economies) 55 East Asia & Pacific (12 economies) 58 Latin America & Carribean (18 economies) 83 0 20 40 60 80 100 % of economies with private credit bureaus or public credit registries where information from microfinance institutions is collected Source: Women, Business and the Law 2012, Doing Business 2012. Note: This figure includes economies covered in Women, Business and the Law which have a private credit bureau or a public credit registry. High-income OECD economies were omitted from this figure because traditional bank financing is more widely available for women. wbl.worldbank.org Mapping the Legal Gender Gap in Using Property and Building Credit 9 shift in women‘s economic activities, including increases Box 3 in women‘s participation in work outside the home, full- In 2002 Nicaragua’s microfinance institutions began time work, and higher skilled work (Hallward-Driemeier sharing information through Sin Riesgos, a credit bureau and Gajigo 2010). promoted by the Nicaraguan microfinance association Other recent reform examples changed the structure of the ASOMIF. By 2004, the Law on Bank Secrecy allowed default marital property regime, or gave spouses a greater commercial banks, which already shared information range of options to pick from. In 2001, for example, Turkey through the public credit registry, to access potential adopted partial community as its default regime in a move clients’ credit histories collected by private credit report- ing firms. Today commercial banks are able to access Sin towards greater legal protection for the property rights of Riesgos records of MFI clients and assess their creditwor- married women. And Morocco enacted a wide ranging thiness and eligibility for conventional loans. family law reform in 2004 including granting spouses the option of choosing full or partial community regimes to Source: CGAP (2011). govern their property relationships (World Bank 2011c). Most recently, in 2010, Kenya promulgated a new While reforms in credit bureau and registry rules can Constitution introducing several legal changes on gender help women entrepreneurs, overarching reforms affecting equality, including granting women equal rights before, women’s property rights may have a significant impact on during, and after marriage and on inheritance (World Bank women’s economic opportunities overall. Such reforms 2011b). provide women with increased bargaining power and allow more control and use of major assets (World Bank Conclusion 2011c). The primary lesson learned from examining women’s Historically, many countries restricted the property rights access to capital through the lens of the Women, Business of married women. In Spain, for example, until 30 years and the Law indicators is that while significant improve- ago married women could not acquire property for value ment has occurred in using property and building credit, or profit, or dispose of assets or obligations without the much remains to be done. While explicit legal restrictions permission of their husbands. Legally, husbands were on women are rare, they do still exist. Moreover, the struc- recognized as the sole administrators of any prop- ture of the default marital property regime may make it erty acquired during marriage, regardless of who actually easier or more difficult for women to leverage assets as purchased it. Married women were not even allowed to collateral and can therefore affect financial outcomes. accept inheritance or seek a division of marital property. Gender neutral regulations such as those governing credit They would not have been allowed to use property as registries and bureaus can also affect women’s ability to collateral for loans. In 1981, legal reforms were enacted build their reputation collateral. recognizing women’s equality in administering marital Identifying legal barriers to women’s property rights and property, allowing them to participate fully in economic examining policies that can help women get credit are life without permission from their husbands (Cuenca- both pathways to improving the legal and regulatory Gómez 2008). framework and promoting women’s economic opportuni- A more recent example can be found in Ethiopia, which ties through targeted reforms. Women, Business and the reformed its family law in 2000. The reform covered a Law will continue to examine reforms in these areas going range of issues affecting women including allowing both forward, as well as analyze the nature of past reforms. By spouses to agree on administering property. Ethiopia also creating a better understanding of how certain aspects amended its legislation to improve women’s access to of the legal and regulatory environment affect women productive resources by granting joint land titles to wives entrepreneurs, and the linkages they have with access to and husbands. This reform was introduced at the regional capital outcomes for women, Women, Business and the Law level before being implemented nationwide. 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Washington, DC: World Bank. wbl.worldbank.org Mapping the Legal Gender Gap in Using Property and Building Credit 11 World Bank. 2010. “Secured Transactions Systems and Endnotes Collateral Registries.” World Bank, Washington, 1 Global Financial Inclusion (Global Findex) Database’s variable DC. ‘Account at a formal financial institution, female (% age 15+)’ is not disaggregated by marital status. In the analysis of the relationship ———. 2011a. Doing Business 2012: Doing Business in a More between marital property regime and account at a formal financial Transparent World. Washington, DC: World Bank. institution it is assumed that all women are married. ———. 2011b. Women, Business and the Law 2012: Removing 2 Global Financial Inclusion (Global Findex) Database’s variables ‘Account at a formal financial institution, female (% age 15+)’ and Barriers to Economic Inclusion. Washington, DC.: ‘Account at a formal financial institution, male (% age 15+)’ denote the World Bank Group. percentage of respondents with an account owned self or together ———. 2011c. World Development Report 2012: Gender with someone else at a bank, credit union, another financial institu- tion (e.g., cooperative, microfinance institution), or the post office Equality and Development. Washington, DC.: (if applicable) including respondents who reported having a debit World Bank. card as % female, age 15+ and as % male, age 15+ respectively. This note presents research to encourage the exchange of ideas on women’s economic participation and the law. The note carries the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this note are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. For more information visit wbl.worldbank.org. For media inquiry, please contact: Nadine S. Ghannam, Phone +1 202-473-3011, email: nsghannam@ifc.org. 12 Mapping the Legal Gender Gap in Using Property and Building Credit wbl.worldbank.org