DOI: 10.1111/1467-8268.

12462

ORIGINAL ARTICLE

Gender disparities in financial inclusion:

Insights from Tanzania

Florence D. Mndolwa | Abdul Latif Alhassan

Development Finance Centre (DEFIC),

Graduate School of Business, University of
Cape Town, Cape Town, South Africa
Correspondence
Abdul Latif Alhassan, Development
Finance Centre (DEFIC), Graduate School
of Business, University of Cape Town,
Cape Town 8002, South Africa.
Email: latif.alhassan@gsb.uct.ac.za and
lateef85@yahoo.com
Abstract
This paper examines the status and determinants of gender disparities in
financial inclusion using a sample of 4,466 individuals from the Finscope
survey in Tanzania. The results provide evidence to support gender disparities
in financial inclusion, mostly pronounced in formal savings (21.3%), formal
accounts (10.6%) and mobile money accounts (9.4%). This is reflected in 17.1%
less likelihood of female ownership of a formal savings account but a 2% higher
likelihood to access formal credit. Finally, the paper documents evidence that
gender disparities in financial inclusion are explained by lower levels of edu-
cation, income and over‐dependence of women on men. The findings support
gender mainstreaming in other sectors to increase employment and education
for women to close the gender gap in financial access.

1 | INTRODUCTION

According to the Global Financial Inclusion database (Global Findex, 2014), women make up 55% or 1.1 billion of the
world's unbanked populations (Demirgüç‐Kunt, Klapper, Singer, & Van Oudheusden, 2015). Although bank account
penetration increased by 13% for both men and women between 2011 and 2014, the gender gap remained at a steady 9%
in developing countries. Further, for every ten women and girls worldwide, four are excluded from the formal financial
system (Consultative Group to Assist the Poor, 2017). The importance of achieving gender parity in financial inclusion
is supported by literature1 which shows that the consumption behavior of women and men differs, such that women in
control of their household resources, prefer to spend more on necessities such as food, children's education, and health
care compared to men, thus increasing the welfare and productivity of their families and communities. Gender equality
and women's empowerment is key to achieving the United Nations Sustainable Development Goal (SDG) 5 on gender
equity (Klugman & Tyson, 2016).
The relevance of financial inclusion for women can therefore be regarded as a shared priority for public and private
sector stakeholders due to the social and economic benefits of women's participation in the formal financial sector. From a
business perspective, reaching the underserved market with useful financial services that meet customers’ needs, im-
proves the provider's revenues (GSMA, 2015). For the banks and other financial service providers, financial inclusion for
women offers a more diversified and steady retail deposit base, as women are stronger savers than men (Van Landingham
et al., 2015). Women attach more weight to children's welfare, reinvesting up to 90% of their income in their families,
compared to 30–40% by men, hence increasing income and education levels for their children and future generations
(Doepke & Tertilt, 2014b). Hence, investing in women has the potential to generate social and economic benefits globally.
The evidence on gender gap in financial inclusion in developing countries remains heavily under‐researched, with little
evidence from Africa (Asiedu, Kalonda‐Kanyama, Ndikumana, & Nti‐Addae, 2013; Aterido, Beck, & Iacovone, 2013;
Fanta & Mutsonziwa, 2016; Kairiza, Kiprono, & Magadzire, 2017).2 With the exception of Kairiza et al. (2017), the

Afr Dev Rev. 2020;1–13. wileyonlinelibrary.com/journal/afdr © 2020 African Development Bank | 1

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cross‐country focused studies (Aterido et al., 2013; Demirgüç‐Kunt, Klapper, & Singer, 2013; Fanta & Mutsonziwa, 2016) are
characterized by limitations such that coefficients in pooled regression are driven by a few countries in the study group.
Notably, there has been little country level empirical work to investigate gender disparities in access to and uptake of mobile
money services after the mobile money revolution in Africa. This limits the ability of policy makers to identify areas where
additional policy intervention is required to expand financial inclusion for women. This paper extends the literature on
the gender gap in financial inclusion by using Tanzania as a case study. It therefore examines the gender effects on financial
inclusion using a Finscope (2013) survey in Tanzania, by first evaluating the relationship between individual characteristics
and the uptake of financial services by gender. In the second stage analysis, the relationship between gender and financial
inclusion is examined across different levels of income.
Tanzania provides an interesting case to examine the determinants of gender disparity in financial inclusion. First,
the country is characterized by significant gender gap in access to formal financial accounts. This is illustrated by an
11% gender gap as 45% of men have access to bank accounts compared with 34% for women (World Bank Group, 2017,
p. 47). Second, Tanzania is among the few emerging market economies with a National Financial Inclusion Frame-
work, having openly declared their commitment to a National Financial Inclusion Agenda through the Maya
Declaration, which was instituted by the Alliance for Financial Inclusion (AFI). Tanzania makes a persuasive case
study to address the gender gap as it has been recognized by the 2014 Global Microscope as the best country in Africa
and ninth globally for having the most conducive regulatory environment for financial inclusion (The Economist
Intelligence Unit, 2015, p. 16). The Tanzania National Financial Inclusion (NFI) council plans to include gender‐
specific targets in the revised NFI framework 2018–2022 with specific objectives to expand women's financial inclusion,
making the country a model policy environment for this objective (AFI, 2016). This analysis on gender disaggregated
data has potential to uncover differences in the situations between men and women because of gender roles and
expectations, thereby promoting evidence‐based policy making (Van Landingham et al., 2015).
This paper makes two major contributions to the empirical literature. As far as the authors are aware, this paper
counts among the few attempts at examining gender gaps in access to formal financial accounts, formal savings, formal
credit and mobile money in emerging economies and perhaps from a sub‐Saharan perspective. Unlike Asiedu et al.
(2013) and Kairiza et al. (2017), which focused on gender of firm owners, this paper focuses on the disaggregated
individual data on to capture an essential economic unit. In addition, the limitations inherent in cross‐country design
employed by Aterido et al. (2013), Demirgüç‐Kunt et al. (2013); Fanta and Mutsonziwa (2016) adds to the appeal of this
empirical investigation. The results of empirical analysis show that the gender gap in financial inclusion is highest in
the ownership of formal savings, followed by formal accounts, mobile money, and access to credit, respectively. In
addition, being a woman was found to decrease the likelihood of ownership of a formal saving account but increase the
likelihood of access to formal credit. However, employed women have a higher likelihood of access to formal accounts
compared to men. Finally, lower levels of education, income, and over‐dependence of women on men were found to be
significant explanatory factors for gender disparities in financial inclusion.
The rest of the paper is structured as follows. Section 2 reviews the literature; Sections 3 and 4 discuss the
methodology and results respectively, and Section 5 concludes the study.

2 | GEND E R DI S PA R I TI E S AN D F I N AN C I A L I N C L US I O N : A
THEORETICAL REVIEW

Following the argument of Aterido et al. (2013), this paper reviews the two theoretical propositions which explain the gender
gap in financial inclusions. The first explanatory factor of gender gap in financial inclusion is attributable to the existence of
institutional factors that increase the barriers to financial services for women. Such barriers could arise from the lower levels
of education and participation in the formal economy, making it difficult—if not impossible—to access formal financial
services in bank accounts and credit. Second, the traditional role of women as home‐keepers and housewives limits their
participation in the formal economy, hence limiting access to formal financial services. Demirgüç‐Kunt et al. (2013) and
Fungácová and Weill (2015) have found evidence of a gender gap in financial inclusion.

H1. Ceteris paribus, gender disparities exist in financial inclusion.

In this section, the paper explains the relationship between gender disparities on one hand and access to credit,
ownership of a savings account, and ownership of formal and mobile money accounts on the other hand. First,
MNDOLWA AND ALHASSAN | 3

in terms of gender differences in access to finance, the gender gap in access to credit in the empirical literature is
mostly explained from the gender of firm owner (Cavalluzzo, Cavalluzzo, & Wolken, 2002; Kairiza et al., 2017;
Muravyev, Schafer, & Talavera, 2009). Similar to firms, the differences in access to finance has been attributed to
“self‐selection bias,” where female owners refrain from applying for credit from formal institutions due to the
lower likelihood of success in the application. This reduces the likelihood of access to credit for females compared
to males.

H2. Ceteris paribus, gender disparities exist in access to credit.

With respect to savings and gender, literature on microeconomic theory identifies consumption smoothing,
precaution, and investment motives for saving (Lewis & Messy, 2012). Hence, the effect of gender on savings can
be linked to the attitudes of gender to these motives. For instance, several studies have provided support for
conservative investment behavior (Bajtelsmit & Bernasek, 1996; Bajtelsmit & Van Derhei, 1997 as cited in
Seguino & Floro, 2003) and women being more risk‐averse (Jianakoplos & Bernasek, 1998; Sunden &
Surette, 1998 as cited in Seguino & Floro, 2003) compared to men. These findings are supported by the notion
that women are home builders, hence more likely to save any additional increases in income compared to men
(Seguino & Floro, 2003). On the contrary, women face several lifetime events (such as childbirth, divorce) that
disrupt their savings patterns (Lewis & Messy, 2012) and decrease their propensity to save, which widens the
gender gap in savings.

H3. Ceteris paribus, gender disparities exist in ownership of savings accounts.

The gender disparity in the ownership of formal accounts can be attributed to the institutional level barriers
that limit the participation of females in formal economic activities, hence ownership of transaction accounts. In
their traditional and perceived role as housekeepers, women are limited to a supportive role and not expected to
engage in economic activities.

H4. Ceteris paribus, gender disparities exist in ownership of formal accounts.

The advent of mobile technology has helped drive the development and growth in digital financial services and
enhanced financial inclusion. However, the high levels of gender gaps in access to mobile phone and Internet
(GSMA, 2015 cited in Warnecke, 2017)3 presents an additional barrier to the uptake of digital financial services
and magnifies the gender gap in financial inclusion. Therefore this paper expects a gender disparity in the
ownership of mobile money accounts.

H5. Ceteris paribus, gender disparities exist in ownership of mobile money accounts.

From the empirical perspective, studies by Rajeev, Vani, and Bhattacharjee (2010), Rajeev and Bhattacharjee
(2012), Demirgüç‐Kunt et al. (2013), Zins and Weill (2016), Fanta and Mutsonziwa (2016), Kairiza et al. (2017),
Ghosh and Vinod (2017), and Morsy (2020), among several others, have examined various aspects of financial
inclusion across different geographical settings. A summary of these studies indicates a steady growth in the
literature on the gender gap in financial inclusion. However, cross‐country and country‐specific studies have found
conflicting results on the significance of gender in determining an individual's level of financial inclusion. The
results from studies by Aterido et al. (2013), Zins and Weill (2016), and Fanta and Mutsonziwa (2016) found limited
support for gender differences in access to finance. The only country‐specific study by Kairiza et al. (2017) in
Zimbabwe was based on entrepreneurs, rather than individuals in household data. To the best of the authors’
knowledge, this paper presents the first empirical evidence on gender gap in financial inclusion at the individual
level using Finscope survey data in 2013. Further, the study examines gender disparities in financial inclusion at
different levels of income to investigate the gender disparities in financial inclusion at different levels of income.
To capture the evolution of mobile money in Africa and its significance in closing the gender gap, this study has
included use of mobile money services as a proxy for financial inclusion. The use of the new proxy enhances
understanding of gender disparities in usage of digital financial services, which has not been previously examined
in the empirical literature.
4 | MNDOLWA AND ALHASSAN

3 | EMPIRICAL S TRATEGY

3.1 | Data

This study uses secondary data from Tanzania's 2013 Finscope Survey conducted by Ipsos, on behalf of Financial Sector
Deepening Trust (FSDT). The data covered a sample of 8,000 individuals collected through a three‐stage sampling
approach and consists of demographic and other financial characteristics. The number of observations of 4,466 is
synonymous with the number of individuals who responded to the question on their earnings per month.

3.2 | Econometric model

In line with Fungácová and Weill (2015) and Zins and Weill (2016), this paper models financial inclusion of the ith
individual as:

n =6
fii = αi + β1 genderi + ∑ βk demographicsi + εi (1)
k =2

Equation (1) is expanded to Equation (2) as:

fii = αi + β1 genderi + β2 edui + β3 inci + β4 agei + β5 employi + β6 dependenti + εi (2)

where fii represents financial inclusion proxied as ownership of a formal account, ownership of formal savings, access
to formal credit, and ownership of a mobile money account. The description of the variables is presented in Table 1.

TABLE 1 Description of independent variables

Variables Definition
Dependent variable: Financial Inclusion
Formal Account Defined as 1 if the individual has an account with a formal financial institution, 0 otherwise
Formal Savings Defined as 1 if an individual saved at formal financial institution in the last 6 months, 0 otherwise
Formal credit Defined as 1 if an individual borrowed from a formal financial institution in the last 12 months, 0 otherwise
Mobile Money Account Defined as 1 if individual used a mobile money account to handle money, 0 otherwise
Demographic characteristics
Gender Defined as 1 if respondent is female, 0 otherwise
Young Defined as 1 if respondent is young, 0 otherwise
Middle age Defined as 1 if respondent is middle aged, 0 otherwise
Older Defined as 1 if respondent is older, 0 otherwise
Human capital
No formal education Defined as 1 if individual has no formal education, 0 otherwise
Primary education Defined as 1 if individual has completed primary school or less, 0 otherwise
Secondary education Defined as 1 if individual has completed secondary education, 0 otherwise
Tertiary education Defined as 1 if individual has completed tertiary education or more, 0 otherwise
Financial capacity
Income‐Poorest 20% Defined as 1 if income is in the first income quantile (<$1), 0 otherwise
Income‐ second 20% Defined as 1 if income is in the second‐ and third‐income quantile ($1–$2.5), 0 otherwise
Income ‐fourth 20% Defined as 1 if income is in the fourth income quantile ($2.5–$5), 0 otherwise
Income‐ richest 20% Defined as 1 if income is in the fifth income quantile (>$5), 0 otherwise
Employed Defined as 1 if individual is employed (received a salary/wage), 0 otherwise
Dependent Defined as 1 if individual is dependent, 0 otherwise

Note: The definition of the dependent variables are adopted from FSDT (2013).
MNDOLWA AND ALHASSAN | 5

3.3 | Estimation approach

Consistent with the estimations of models with dichotomous dependent variables, the logit estimation technique
regression was employed to examine the decision to be financially included or otherwise. This equation is specified as
follows:

Yi = βXi + ui (3)

where Yi = 1, if the individual makes a choice to be financially included and Yi = 0, if the individual makes a choice not
to be financially included. Equation (3) represents a model with a binary choice involving an estimation of the
probability of an individual adult in Tanzania being financially included (Yi ) given a set of factors ( Xi ) which are
exogenous to the individual.
Below is the mathematical representation:

P(Yi = 1) = f (Xi , βi ) (4)

P(Yi = 0) = 1 − f (Xi , βi ) (5)

where Yi is the observed response of the ith individual adult who is either included or not included and Yi = 1; Yi = 0 and
Xi are as previously defined. As explained by Greene (2003, p. 667) the logit model uses the logistic cumulative function
to estimate the probability as follows:

eu (6)
P (Y = 1) =
1 + eu
eu (7)
P (Y = 0) = 1 −
1 + eu

where u = βi X. Following Greene (2003), the probability model is a regression of conditional expectations of Y on X.

4 | RESULTS

4.1 | Descriptive statistics

Table 2 presents descriptive statistics of the financial inclusion indicators and gender gap4 in formal account, formal
savings, formal credit, and mobile money account. The table shows that 51.9% of respondents have an account with a
formal financial institution, surpassing the government's target of attaining 50% of individuals access to formal financial
services by 2016 (Tanzania National Council for Financial Inclusion, 2014). In addition, 26.1% of the respondents save
with formal financial institutions but only 3.7% accessed formal credit. This indicates that access to formal credit in
Tanzania is not commensurate with the high incidence of ownership of formal accounts. Bank credit5 to individuals in

TABLE 2 Descriptive statistics for financial inclusion indicators

Female Male Total

4,887 3,100 7,987 Gender gap in access
Sample size (n) Obs. Percent Obs. Percent Obs. Percent Percent
Formal account 2,338 47.8 1,809 58.4 4,147 51.9 −10.6
Formal saving 867 17.7 1,210 39.0 2,077 26.1 −21.3
Formal credit 165 3.4 123 4 295 3.7 −0.6
Mobile money account 2,044 41.8 1,586 51.2 3,630 45.4 −9.4
Source: Authors’ estimate from research data.
6 | MNDOLWA AND ALHASSAN

Tanzania is very low due to the high cost of borrowing and scarcity of credit in the country. This is consistent with
Demirgüç‐Kunt and Klapper (2012) who observed that though 23% of adults in Africa owned a formal account, only 5%
of adults in sub‐Saharan Africa borrowed from a formal financial institution. This suggests that Tanzanians appear to
have a higher propensity to save than the average adult in Africa but lower access to formal credit. It is also observed
that less than half of the respondents (45.4%) used mobile money services. This could be explained by the higher
barriers in access to mobile phones and network connectivity, which inhibits the uptake of digital financial services.
The existence of a gender gap is observed across all four indicators. First, 10.6% fewer women have access to an
account at a formal financial institution than men. The gender gap in access to bank account is narrower than that for
mobile money usage (−7.4% vs. −9.4%), respectively. This suggests a larger gender disparity in usage of mobile money
services and reflects the existence of larger barriers in access to mobile phones and internet for women compared to
men. Consistent with formal accounts, a wide gender gap of −21.3% exists in access to formal savings, implying more
women are excluded in access to formal savings due to corresponding exclusion in access to formal accounts. However,
only a small gender gap exists in access to formal credit (−0.6%) where women have lower access to credit at a formal
financial institution than men, 3.4% versus 4%, respectively. The small gender gap also suggests that women access
credit from non‐bank financial institutions and informal accounts where women have the highest membership (58.9%),
since banks are known not to advance a loan without collateral.
From Table 3 it can be observed that the sample is made up of fewer middle‐aged women compared to men (29.5%
vs. 34.2%). It is also observed that 14.4% of respondents reported to have “no formal education,” with women being the
majority compared to men (16.9% vs. 10.4%).

4.2 | Regression results

This section explores whether gender differences in uptake of formal financial services still hold when controlling for
other individual level characteristics. Table 4 displays results of logit estimations for main indicators of financial inclusion.

TABLE 3 Descriptive statistics of determinants of financial inclusion

Total (N) Percent Female (N) Percent Male (N) Percent

Sample size (n) 7,987 100 4,887 61.20 3,100 38.80
Age
Young adults (16–35 years) 4,503 56.4 2,968 60.7 1,535 49.5
Middle aged (36–55 years) 2,504 31.4 1,444 29.5 1,060 34.2
Older (Above 55 years) 980 12.3 475 9.7 505 16.3
Total respondents 7,987 100 4,887 61.2 3,100 38.8
Level of education
No formal education 1,146 14.4 824 16.9 322 10.4
Primary education 5,044 63.2 3,038 66.2 2,006 64.8
Secondary education 1,670 20.9 970 19.8 700 22.6
Tertiary 125 1.6 55 1.1 70 2.3
Total respondents 7,985 100 4,887 61.2 3,098 38.8
Levels of income
Poorest 1,395 31.2 1,046 37.2 349 21.1
Second Quintile 1,765 39.5 1,113 39.6 652 39.4
Fourth Quintile 793 17.7 415 14.8 378 22.8
Fifth Quintile 515 11.5 239 8.5 276 16.7
Total respondents 4,468 55.9 2,813 57.6 1,655 53.4
Employment status (employed) 669 8.4 296 6.1 373 12
Dependent 2,858 35.8 2,608 53.4 250 8.1

Note: N covers all respondents covered by the Finscope survey.

Source: Authors’ estimates from research data.
MNDOLWA AND ALHASSAN | 7

TABLE 4 Determinants of financial inclusion in Tanzania

Formal account Formal savings Formal credit Mobile money

Variables dy/dx dy/dx dy/dx dy/dx
Gender (Female) −0.0123 −0.171*** 0.020*** −0.009
(0.016) (0.014) (0.007) (0.016)
Age 0.010*** −0.002 0.011*** 0.007**
(0.003) (0.002) (0.002) (0.003)
Age2 −0.0001*** 0.00002 −0.0001*** −0.0001***
(0.000) (0.000) (0.000) (0.000)
No formal education −0.874*** 0.015 −0.085*** −0.515***
(0.203) (0.051) (0.024) (0.086)
Primary education −0.665*** −0.006 −0.035** −0.286***
(0.202) (0.047) (0.014) (0.083)
Secondary education −0.532*** −0.005 −0.013 −0.207**
(0.203) (0.047) (0.013) (0.084)
Poorest −0.449*** −0.003 −0.090*** −0.430***
(0.034) (0.023) (0.013) (0.029)
Second quintile −0.332*** 0.00002 −0.058*** −0.310***
(0.034) (0.022) (0.009) (0.029)
Fourth quintile −0.232*** −0.0005 −0.029*** −0.202***
(0.037) (0.024) (0.008) (0.032)
Employed 0.162*** −0.016 0.036*** 0.103***
(0.025) (0.020) (0.007) (0.024)
Dependent −0.021 −0.015 −0.013 −0.018
(0.016) (0.016) (0.008) (0.016)
Observations 4,466 4,466 4, 466 4466
2
Pseudo R 0.1356 0.0393 0.1601 0.1136
Log likelihood −748.799 −2406.816 −748.799 −2734.917

Notes: Tertiary education and fifth quintile omitted due to multicollinearity. Third and second quintiles are combined due to low observations. Robust standard
errors are in brackets.
**5% significance level.
***1% significance level.
Source: Authors’ estimate from research data.

The gender dummy has no significant relationship with formal account ownership, implying that being female does
not affect access to an account at a formal financial institution, similar to the findings of Aterido et al. (2013), Fanta and
Mutsonziwa (2016), Allen, Demirgüç‐Kunt, Klapper, and Martinez Peria (2016), and Zins and Weill (2016).
The gender dummy is negative and significant for formal savings, which indicates that females have a lower
likelihood of saving at a formal financial institution by 17.1%. The barriers to women in participating in formal
economic activities, which compels the usage of informal savings mechanisms among women, partly explain this result.
These results are similar to studies by Demirgüç‐Kunt et al. (2013) and Fanta and Mutsonziwa (2016).
With respect to access to formal credit, the gender dummy is positive and significant (at 1% significance level)
indicating that females have a higher likelihood of accessing credit from formal financial institutions by 2% compared to
male counterparts. This result can be explained by the narrow gender gap in formal credit (−0.6%) in Table 2, which
includes credit from banks, microfinance institutions, savings and credit cooperative organisations (SACCOs) and
mobile money services. While bank credit may be lower for women, microfinance institutions in Tanzania target small
and medium‐scale entrepreneurs, with the majority (54%) being women (Financial Sector Deepening Trust, 2012). On
the other hand, being female is found to have no significant relationship with mobile money accounts, indicating that
an individual's gender does not affect their usage of mobile money accounts. This suggests both men and women face
8 | MNDOLWA AND ALHASSAN

the same barriers to usage of digital financial services in Tanzania, contrary to the findings of Zins and Weill (2016) and
FSDT and Busara (2018).
Age is positive and significant while Age 2 is negative and significant for formal account, credit and mobile
money at the 1% significance level. This shows that age has a linear relationship with the three indicators to a
certain point where it assumes a quadratic function and reflects an inverted U‐shaped relationship between age
and financial inclusion. This finding is explained by the Life‐Cycle Hypothesis, which posits that wealth follows
a hump shape whereby it is positive during an individual's active working age and negative when they are retired
(Zins & Weill, 2016).
The coefficient of education is negative across all three categories—which indicates that lower levels of education
reduces the likelihood of financial inclusion—but the effect is more pronounced on formal and mobile money accounts
compared to access to credit. Specifically, the likelihood of owning a formal account decreases by 87.4%, 66.5%, and
53.2% for no formal education, primary and secondary education, respectively. This is consistent with the findings of
Ghosh and Vinod (2017) in India.
Income levels enter the model negative and significant for formal accounts, access to credit and mobile
money. The coefficients decrease as respondents migrate from the poorest to the second‐ and fourth‐income
quintiles in descending order to indicate that the likelihood of accessing financial services increases as income
grows. This suggests that migrating from the poorest to the fourth quintiles of income reduces the likelihood of
being financially excluded. Employment is positively and significantly related to formal account (16.2%), formal
credit (3.6%), and mobile money account (10.3%) at 1%. This indicates employed respondents have a higher
likelihood of formal financial services compared to the unemployed. Employed individuals are attractive to bank
and non‐bank financial providers as they have a reliable source of income. Similar evidence has been docu-
mented by Fanta and Mutsonziwa (2016).

4.3 | Determinants of gender gaps in financial inclusion

Table 5 displays logit estimations of determinants of financial inclusion across gender in Tanzania. At the top of each
column are the two dependent variables—that is, formal savings and formal credit—that were found to have significant
gender disparities in Table 5 and are estimated for both male and female samples.
For savings, the coefficient of Age is negative and significant at 1% while Age 2 is positive and significant at
10% among the female respondents. This suggests that women have a lower propensity to save (−0.5%) at a
younger age which only increases (0.01%) after a certain age is attained. With respect to formal credit, the
coefficient of Age is positive while Age 2 becomes negative for both male and female sub‐samples at the 1% level
of significance. Consistent with the life‐cycle pattern observed for the results in Table 5, these results imply that
the likelihood of access to formal credit increases by almost the same percentage for both women and men
during their economically active age (1.1% and 1.3%, respectively). However, this effect diminishes at older age
for both genders (0.01%).
Having no formal education decreases women's likelihood of using formal credit compared to their male coun-
terparts (−9% vs. −6.9%). However, as women attain primary education the likelihood of women's uptake of formal
credit decreases by a lower percentage compared to their male counterparts (−3.4% vs. −4.1%). These results indicate
that gender disparities in uptake of formal credit are caused by women having “no formal education” which decreases
their financial capabilities and therefore their uptake of formal credit. These findings are similar to Aterido et al. (2013)
who found education to be the strongest factor in explaining the different use of formal financial services by gender,
increasing access especially for women with secondary level education.
The level of income classification is another significant determinant of gender disparity in uptake of formal credit.
The poorest women (earning less than $1 a day) are less likely to borrow from a formal financial institution compared
to their male counterparts (−10% vs. −6.7%). Similarly, women in the second quintile earning just above the poverty
line (less than $2.5 a day) are much less likely to borrow from a formal financial institution than their male coun-
terparts (−7% vs. −3.94%). This indicates that movement from the poorest quintile to second income quintile reduces
that likelihood of access to credit by approximately 3% (10% − 7%). This suggests that gender disparities in uptake of
formal credit are caused by women being poorer than men.
The coefficient for employment is positive and significant in the male sample, indicating that employed men are
6.5% more likely to access credit from a formal financial institution. The coefficient of dependency is negative and
MNDOLWA AND ALHASSAN | 9

TABLE 5 Determinants of gender disparities in financial inclusion

Formal savings Formal credit

Female Male Female Male

Variables dy/dx dy/dx dy/dx dy/dx
Age −0.005*** 0.005 0.011*** 0.013***
(0.003) (0.004) (0.002) (0.003)
Age 2
0.0001* −0.0001 −0.0001*** −0.0001***
(0.000) (0.000) (0.000) (0.000)
No formal education 0.053 0.009 −0.09*** −0.069***
(0.067) (0.089) (0.029) (0.042)
Primary education 0.039 −0.041 −0.034** −0.041*
(0.064) (0.078) (0.017) (0.024)
Secondary education 0.032 −0.03 −0.017 −0.009
(0.064) (0.078) (0.017) (0.023)
Poorest quintile −0.039 0.044 −0.100*** −0.067***
(0.028) (0.043) (0.015) (0.025)
Second quintile −0.03 0.029 −0.070*** −0.039***
(0.028) (0.037) (0.011) (0.015)
Fourth quintile −0.018 0.015 −0.036 −0.022
(0.031) (0.039) (0.010) (0.014)
Employed 0.001 −0.031 0.010 0.065***
(0.027) (0.033) (0.010) (0.012)
Dependent −0.021 0.045 −0.016** −0.034
(0.015) (0.048) (0.008) (0.050)
Observations 2,812 1,654 2,812 1,654
2
Pseudo R 0.0028 0.003 0.1917 0.1923
Log likelihood −1317.123 −1084.503 −423.163 −295.983

Note: Robust standard errors are in brackets.

*10% significance level.
**5% significance level.
***1% significance level.
Source: Authors’ estimate from research data.

significant in the female sub‐sample, indicating that being a dependent woman decreases the likelihood of accessing
formal credit by 1.6%. These results suggest that unemployment and dependency explain gender disparities in uptake of
formal credit and are caused by women being less employed than men.

4.4 | Robustness: Gender, financial inclusion, and income levels

The determinants of financial inclusions are estimated for male and female sub‐samples in the poorest and
fourth income quintiles. The results in Table 6 display the marginal effects of logit estimations for barriers to
financial inclusion among the poorest segment (below $1) of society. The results show gender differences
manifest within the poorest segment of society. Having “no formal education” (NFED) is found to have a
significant effect on financial inclusion for both women and men in the poorest segment where it reduces their
likelihood of ownership of accounts at a formal financial institution by 58.2% versus 54%, respectively. This
suggests that women in the poorest segment with no formal education have a higher likelihood of not owning a
formal account compared to men.
10 | MNDOLWA AND ALHASSAN

TABLE 6 Gender, financial inclusion and income (poorest quintile)

Formal account Formal savings Formal credit Mobile money

Female Male Female Male Female Male Female Male

Age 0.002 0.004** −0.001 0.003** 0.004 0.001* 0.0003 0.002
NFED −0.582** −0.540*** 0.063 0.029 0.000 0.000 −0.108 −0.477
PED −0.350 −0.237*** 0.038 0.089 0.008 −0.038 0.107 −0.218
SED −0.272 0.000 0.000 0.000 0.000 0.000 0.1419 −0.027
Employed 0.033 0.058 −0.04 −0.010 0.009 0.032 −0.003 0.076
Dependent −0.015 −0.093 −0.016 0.065 −0.010 0.000 0.002 −0.131*
Observations 1045 347 1041 347 843 248 1045 349
Pseudo R 2
0.0271 0.0575 −477.875 0.0161 0.0501 0.1661 0.023 0.0423
Log likelihood −676.476 −226.466 0.003 −228.603 −59.7884 −20.404 −645.498 −228.634

Notes: NFED: no formal education; PED: primary education; SED: secondary education.
*10% significance level.
**5% significance level.
***1% significance level.
Source: Authors’ estimate from research data.

Table 7 presents the marginal effects of the determinants of financial inclusion for female and male sub‐samples in
the fourth income segment ($2.5–$5 a day). The coefficient of age is negative (positive) and significant for females
(males) indicating a lower (higher) likelihood of access to a mobile money account for women (men) in the higher
income segment. This suggests that the older women are, the less inclined they are to use new technology than men in
this segment, which is similar to observations by FSDT and Busara (2018) on digital and technology literacy barriers to
financial inclusion. The negative effect of NFED is observed to be higher for females (−30.3%) compared to males
(−20.6%). The estimated effect reduces among females with PED (−13.6%) for a formal account, which suggests that
improving access to education among women significantly reduces their likelihood of exclusion in the formal financial
system. The positive coefficients for employment are higher for males compared with females, indicating that the
likelihood of women's access to formal financial accounts is lower than for men.

TABLE 7 Gender, Financial Inclusion and Income (Fourth) Quintile

Formal account Formal savings Formal credit Mobile money

Female Male Female Male Female Male Female Male

Age −0.001 0.0002 −0.001 −0.001 0.001 −0.001 −0.005** 0.002*
NFED −0.303*** −0.206** 0.102 0.056 −0.113 −0.493 −0.198** −0.089
PED −0.136*** −0.032 0.082 0.062 −0.054 −0.275 −0.0275 −0.065
SED 0.000 0.000 0.0142 0.051 −0.031 −0.27 0.000 −0.058
Employed 0.254** 0.319*** 0.066 −0.06 0.04 0.161*** 0.113 0.077***
Dependent −0.042 0.253 −0.071* 0.082 −0.026 0.197 −0.067 0.043
Observations 409 368 415 378 415 378 409 378
2
Pseudo R 0.0714 0.0822 0.0163 0.0042 0.0309 0.0431 0.0377 0.0703
Log likelihood −213.313 −198.476 −195.830 −245.319 −113.999 −234.597 −246.092 −90.43

Notes: NFED: no formal education; PED: primary education; SED: secondary education.
*10%.
**5%.
***1%.
Source: Authors’ estimate from Research Data.
MNDOLWA AND ALHASSAN | 11

5 | CONCLUSION AND POLICY RECOMMENDATIONS

This paper provides insights into determinants of the gender gap in financial inclusion, expanding the literature on
gender and financial inclusion from the perspective of individuals in a developing economy. Using logit regression and
Finscope survey 2013 data, this study examines the association between individual's gender and their uptake of
financial services in ownership of formal accounts and savings, access to credit, and ownership of mobile money
accounts. Unconditional analysis provides evidence to support the existence of gender disparities in the ownership of
formal account and formal savings, access to formal credit and ownership of mobile money accounts. The gender gap
was observed to be higher in formal savings, followed by formal account and mobile money accounts, respectively.
The paper found no significant difference in the ownership of formal account and mobile money by females and
males, unlike usage of formal savings and access to formal credit. Specifically, women in Tanzania are 17.1% less likely
to own a savings account with a formal financial institution and 2% more likely to borrow from these institutions.
Secondly, other factors such as age, level of income, and level of education significantly affect access to and usage of
formal financial services. Employment was found to be the most significant factor increasing women's likelihood to
access formal accounts by 25.4%. However, it was observed that fewer women than men are employed. Additionally,
women's lower uptake of formal financial accounts results from women having lower levels of education than men
which decreases their financial literacy and capabilities. Other contributing factors to the gender gap, are women being
poorer and more dependent than men.
The following policy insights are derived from the analysis. The study recommends policy makers to, first, close the
gender gap in employment by increasing women's levels of employment, which will increase their likelihood of
accessing formal financial services. Second, close the gender gap in education by increasing women's levels of edu-
cation, which will decrease their likelihood of exclusion in the formal financial sector. Third, increase financial
education for women with potential to increase their financial capabilities. These recommendations require gender
mainstreaming or applying a gender lens in other sectors of the economy since reducing gaps in other dimensions will
also reduce gaps in financial inclusion. They support the incorporation of gender targets within all formal financial
institutions, both banks and non‐banks, set by the Tanzania Financial Inclusion Framework.

ACKNOWLEDGMEN TS
The authors acknowledge the constructive comments from two anonymous reviewers on an earlier version of the paper.
All other caveats apply.

E N D N O T ES
1
Refer to Blundell and Macurdy (1999), Doepke and Tertilt (2014a), Duflo (2009), Prina (2015).
2
Outside Africa, Ghosh and Vinod (2017), Rajeev and Bhattacharjee (2012), and Rajeev et al. (2010) have all examined various aspects of
gender and financial inclusion in India. In addition, studies by Arouri and Cuong (2020), Jawara (2020), Kim (2020), Kinyondo and Kagaruki
(2019), and Ogunleye (2017), have all explored different aspects of gender dimensions on financial inclusion, employment, earnings gap,
household welfare and social economic development.
3
About 307 million women (64% of women in SSA) do not own any phones and there is a gender gap in Internet access of 43% (GSMA, 2015
cited in Warnecke, 2017).
4
Similar to Financial Inclusion Insights, this study defines the gender gap as the difference between the percentage of men and women
within certain key financial indicators or measures of interest (InterMedia, 2015).
5
According to the World Bank Group (2017), only 1.24 million individuals borrowed from banks as of April 2016, representing about 2% of
the Tanzanian population.

ORCID
Abdul Latif Alhassan https://orcid.org/0000-0002-4993-335X

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How to cite this article: Mndolwa FD, Alhassan AL. Gender disparities in financial inclusion: Insights from
Tanzania. Afr Dev Rev. 2020;1–13. https://doi.org/10.1111/1467-8268.12462