The banking sector’s commitment to lending to women

Santo Domingo – Bank loans to women have been increasing in the last few years, but what is happening now is off the charts because of the amounts announced.

Never before has the country’s banks poured so much money into financing women entrepreneurs or small businesswomen.

In recent years, there has been a significant increase in bank financing for women, which went from RD$93,855 million in 2014 to RD$287,600 million in 2023, for an increase of RD$193 billion in the period, according to figures from the Association of Banks of the Dominican Republic (ABA).

According to a report by the Superintendency of Banks (SB), the population of women with at least one formal credit had increased at a rate of 2.9% annually between 2017 and 2022, higher than the growth in the number of male debtors, which had been 1.5% annually in that period. In addition, the SB report reveals that 20% of financial institutions allocate an annual item to gender-focused initiatives. In the case of multiple banks, the proportion reaches 44%.

But what is happening now is out of the ordinary. Banco Popular, which has an outstanding portfolio of loans for women of more than RD$60 billion in favor of some 180,000 clients, recently announced that it will allocate up to US$250 million to SMEs led by women, thanks to the alliance it reached last year with the United States Development Finance Corporation (DFC) and Banco Santander.

Banco BHD also recently announced financing agreements with IDB Invest and the International Finance Corporation (IFC), a member of the World Bank Group, through which the international organizations provided lines of credit for US$75,000,000 each, which together amount to US$150 million, to contribute to access to credit in Dominican pesos for micro, small and medium-sized enterprises, particularly those led by women or owned by women in the Dominican Republic.

Other banks like Banco de Reservas have special financial support programs for women.

This is part of a deliberate policy to close the gap in access to bank credit between men and women. In November last year, the Dominican Republic joined the WE Financial Code for Women Entrepreneurs.

But women have also earned the banks’ interest in supporting them. Female clients of financial intermediary entities have a delinquency rate of 1.43%, lower than that of their male counterparts, with 2.05% as of July 2023, according to a report by the SB.

This coincides with what is happening in other Latin American countries. Chile’s Financial Market Commission (CMF) study reveals that women save more and take on less debt than men.

Nor are women lagging in management skills. The report Women Matter: A Latin American Perspective, by the consulting firm McKinsey, reveals that of the companies listed on the stock exchange, those with more excellent female representation obtain a 44% higher return on investment and 47% higher profit margins, and a study by the World Bank in seven Latin American countries shows that women plan more and respect their spending plans more.

In other words, besides doing justice, it is also good and safe for banks to provide financial support to women.