Gender gap in financial inclusion and financial stability: does climate risk make a difference?

The gender gap in financial inclusion has remained stubbornly high. At the same time, policymakers have become increasingly focused on the potential impact of climate risk and, in particular, on the banking sector. The study combines these two strands of literature. In particular, it analyses the relevance of climate risk on bank stability when there exists a gender gap in financial inclusion. To inform this debate, we integrate data on climate risk with multiple waves of Findex data, focusing on both account ownership and use. The findings reveal that in countries with higher adaptive capacity, lower gender gap in account ownership exerts a positive impact on bank stability. In case of use, the impact is manifest more strongly in case of savings as compared with borrowings. The key takeaway from the analysis is policymakers need to be mindful of climate risk while assessing the link between financial inclusion and banking stability.