Convergence patterns among female borrowers: evidence from the global microfinance industry

Purpose Microfinance has emerged as an important development tool for providing financial services to poor and underserved populations, particularly women, who have historically been marginalized and excluded from the mainstream financial system. Despite the rapid global expansion of the microfinance sector, little is known about whether countries are converging toward similar levels of female borrower participation or whether heterogeneous development paths persist. This study aims to investigate the convergence dynamics of the proportion of female borrowers across countries. Design/methodology/approach The study uses a global panel of 54 countries covering the period 2003–2018. To achieve the research objective, it uses the panel convergence methodology of Phillips and Sul (2007), complemented by a β-convergence analysis, to examine both long-run convergence patterns and catch-up dynamics. The panel convergence approach enables the endogenous identification of convergence clubs among countries. Findings The Phillips and Sul log-t test strongly rejects the hypothesis of full-sample convergence, indicating that countries do not converge toward a common global equilibrium. Instead, the club clustering algorithm identifies four distinct convergence clubs, suggesting the existence of multiple long-run equilibria characterized by heterogeneous transition paths. The ß-convergence results further reveal a significant catch-up effect, whereby countries with lower initial proportions of female borrowers experience faster subsequent growth than those with higher initial levels. Practical implications These findings underscore the importance of country-specific institutional, regulatory and socioeconomic conditions in shaping women’s financial inclusion. They suggest that a uniform policy approach may be insufficient to promote equitable access to microfinance. Instead, policies should be tailored to the structural characteristics of each convergence club to accelerate women’s financial inclusion and reduce persistent cross-country disparities. Originality/value To the best of the authors’ knowledge, this study is among the first to examine the convergence of female borrower participation across countries using large-scale global microfinance data.