Gender Finance Gap and Women’s Economic Empowerment in Ethiopia

This study analyses the gender finance gap and the economic impact of financial inclusion for women’s empowerment in Ethiopia, utilizing nationally representative data from the Global Findex and Living Standards Measurement Surveys (LSMS). It estimates a persistent gender gap in formal account ownership of 12% to 16% in recent years. It identifies key drivers of this disparity, including gaps in educational attainment, income levels, employment status, and savings behaviour. The study finds that financial inclusion has a significant positive effect on women’s economic agency. Access to formal accounts increases a woman’s supply of paid labour by over four hours per week. Furthermore, the presence of at least one financially included woman in a household generates positive welfare spillovers, significantly boosting household asset accumulation and expenditures on nondurable goods. The Average Treatment Effects (ATE) of financial inclusion is about 240 Ethiopian Birr (ETB) in monthly non-food spending and a rise of 1.3 units on a standardized asset index. The results underscore that policies specifically designed to promote women’s ownership and active use of transaction accounts can catalyse women’s empowerment by strengthening labour force participation and enhancing household consumption capacity and resilience, contributing directly to broader development goals in Ethiopia.