The Shared Roles of the Central Bank, Commercial Banks and Women Chambers in Promoting Innovative Financing Models for Women-led SMEs

Abstract

Over the last two decades, the focus of development policy initiatives to reduce poverty has undergone a significant shift. Known as the "inclusive finance" approach, these new initiatives advocate for a "Finance for All (FFA)" approach to bring excluded populations into the realm of mainstream banking, developing new schemes for ensuring better access to financial credit, and educating them about various financial products and services which may help them in making informed decisions. In the context of Bangladesh, the impact of these initiatives has already been felt and over the years, significant efforts have been made to facilitate the level and extent of financial inclusion of the poor into the mainstream banking sector. However, Bangladesh's approach towards inclusive finance differs from the broader FFA policy agenda. Whereas in general inclusive financial market approaches leave a focus on women and gender equality outside the core of the debate, special efforts have been made in Bangladesh for increasing women’s access to finance. The introduction and implementation of these policy initiatives raise a few important questions: (1) What are the key barriers faced by women entrepreneurs in gaining access to markets and becoming engaged in different business ventures? (2) How effective are the existing policies and programs in addressing the challenges faced by the women entrepreneurs? (3) What actions can be taken to make the policy and programmatic interventions more helpful and effective? This paper focuses on finding answers to these key questions while providing a comprehensive and detailed analysis of the situation of the women entrepreneurs in Bangladesh. At the same time, this paper concentrates on both the demand side factors (i.e., issues related to the capacity and understanding of women entrepreneurs that may hinder their access to credit) and the supply side factors (i.e., the impact of policies developed by the Government of Bangladesh and Bangladesh Bank on women’s entrepreneurship, as well as the capacity, willingness and commitment of commercial banks to support women entrepreneurs). Further, research suggests women’s business chambers with adequate capacity can play a complementary role in advancing women’s access to finance. This study explores the role played by the District Women Chambers in the context of Bangladesh.