Financial Laws and Regulations

Access to credit is vital for women, allowing them to manage fluctuations in income and expenditures and to expand their businesses. As we saw in the preceding chapters, credit can be an important source of economic empowerment for women within the household. But in many countries. underdeveloped financial markets, controlled interest rates, and overly rigid backings regulations have led to systems of credit that tend to shut out the pool. many of whom are women If financial institutions are to lend to those unable to obtain credit in the current environment. interest rates must be liberalized. Positive interest rates have important effects on informational money markets, which tend to be more exploitative when formal sector credit is rationed.

Changes in the laws governing access to credit are also vital because women's business profiles often differ from men's. Compared with men. women are more likely to work in low-risk small, and home-based businesses (Rhyne and Holt 1994). This situation creates a demand for small loans that can be obtained without formal, legally secured collateral and that offer relatively flexible repayment terms. Legislation that encourages broad access to financial institutions can increase the availability of these types of loans. but legal changes may also be needed to extend the range of acceptable collateral.

In many countries the regulatory framework contains provisions that are especially punitive to small firms. This adds an additional constraint on women, whose businesses are concentrated at the small end of the size The deregulation of the microentreprise sector would remove implicit disincentives to small-film activity and would relieve some of these Such action would enhance women entrepreneurs' prospects of benefiting from training or credit programs targeted to the microentreprise sector (World Bank 1994d. 1995c).

Redirecting Public Policies and Expenditure to Promote (tender Equality)

It is unlikely that legal reform by itself will be sufficient to ensure that women and men ate treated equally. Further public action may be required to guarantee that gentler-neutral laws are enforced at both national and local levels.