Effect of Gender on Access to Loans in Malawi

Abstract

Access to loan is vital for households to supplement their current flow of income as they strive to meet their consumption and investment expenditure needs. The purpose of this study was to determine the effect of gender on access to loans and amount of money that is borrowed. This is a quantitative research that used secondary cross section data collected from all parts of the country by the Malawi National Statistical Office (NSO) called The Fifth Integrated Household Survey (IHS 5) data. This is cross section data that was collect in the period from 2019 to 2020. Data was analysed quantitatively by using descriptive statistics and econometric models. Probit model was used to assess the effect of gender on access to credit and a multiple regression was used to determine the effect of gender on amount of money a household borrowed. This study found that Malawians borrow money mainly for consumption. On access to loans, results show that, being female increases the probability of accessing loans but reduces the amount of borrowed money. Education was found to have positive effect on both access to credit and amount of credit. To increase the amount of money that women borrow, the study recommends that public loan programs like National Economic Empowerment Fund (NEEF) must put in place deliberate mechanisms aimed at increasing the amount of money they lend to women. On education, we recommend compulsory primary school education, Business Studies in secondary school education and Entrepreneurship module in Colleges.