IDB Invest and Red de Instituciones Financieras de Desarrollo Work to Reduce Gender Bias in Ecuador
IDB Invest signed an agreement with the Red de Instituciones Financieras de Desarrollo (RFD), a non-profit association in Ecuador with over 50 financial institution members including banks, cooperatives, and NGOs, to provide advisory services to measure gender bias in lending using an online tool developed by the Inter-American Development Bank (IDB) and IDB Invest.
This survey tool measures the implicit and explicit gender biases of financial institutions personnel and the likelihood that these biases will affect their behavior. The survey results are then validated using historical information on credit officers’ past loan approvals. The potential foregone profits to the institution due to less favorable conditions offered to women-led businesses can also be quantified.
When businesses owned or led by women apply for a loan, they are more likely to be rejected than their male peers and when they do access credit, the terms are typically less favorable: smaller amounts, shorter terms, higher interest rates and larger guarantees.
This is largely due to prevailing, often unconscious, gender biases among credit officers who make lending decisions. Reducing gender bias in lending is key for unleashing the potential of women-led businesses to grow and create jobs.
IDB Invest, in collaboration with the IDB, will work with RFD to recommend and pilot interventions to reduce these biases, with the objective of increasing access to finance for women-led micro, small and medium-sized enterprises (MSMEs) in Ecuador. Through this collaboration with RFD, IDB Invest aims to have a systemic effect on reducing gender bias throughout the country’s financial sector.
These advisory services are being financed by the WeForLAC fund as part of the Women Entrepreneurs Finance Initiative (WeFi). To date, IDB Invest has provided several partner financial institutions with technical advice on this topic and more than 850 credit officers have been screened by the gender bias tool.
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region. Access our virtual tour.
About IDB Invest
IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of $16.33 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About the Red de Instituciones Financieras de Desarrollo (RFD)
Established in 2000, the Red de Instituciones Financieras de Desarrollo (RFD) [Network of Development Financial Institutions] is a non-profit organization that brings together 53 institutions including banks, cooperatives and NGOs, oriented towards microfinance and solidarity finance in Ecuador. Its main objective is to promote financial inclusion in Ecuador as an effective way to combat poverty, promote social and economic development, and reduce the gaps that contribute to the exclusion of large segments of the population, including women-owned/led MSMEs.