Women's Access to Credit

Executive Summary

The purpose of the Women's Access to Credit project was to carry out a survey that would examine women's ability to access credit in New Zealand. Through this examination, it was hoped that any possible barriers to women gaining credit, or other influences that prevent women attaining economic independence, could be identified.

This project was also in line with the International Council of Women (ICW) Plans of Action 2002-03 where under the heading Sustainable Development, one of the action plans was to carry out research on credit facilities for the establishment of small business projects for women.

In 2003, the Women's Access to Credit survey was developed by Gillian Leigh in consultation with the National Council of Women of New Zealand Board of Management. The project plan and terms of reference were developed in July 2003. The survey was distributed via NCWNZ members. Surveys were also distributed by the Maori Women's Welfare League and made available to the Wellington Ethnic Women's group, which meets in the Office of Ethnic Affairs.
The response rate for the survey was approximately 11%. The profile of the sample population demonstrated thatthe majority of respondents were well-educated, New Zealand European women in the 41- 65 age bracket, with no dependent children. A major proportion of the sample, 41%, was in paid employment and 48% was city based. Less than a quarter of respondents (21%) received some type of Government benefit; the majority listed government superannuation as the type of benefit.

In terms of the "Average New Zealand" woman, she is likely to be 5 - 10 years younger than the median for this survey. She will in all likelihood have an educational qualification, but it is not likely to be as high as the average survey respondent. She is also likely to have a partner and at least one child. Commonalities shared by the "Average New Zealand" woman and the survey respondents are that they live in the city and are in paid employment.

In general, women applied for the whole range of financial credit types covered in this survey. The most common type of credit applications lodged were for credit cards (29%), closely followed by mortgages (27%), hire purchases (22%) and loans (19%).

The survey found that trading banks were the preferred institution for obtaining credit, except in the case of hire purchases, where retail outlets were preferred. Of those accessing credit in the form of a credit card, 85% used a trading bank, for mortgages 83%, loans 62% and other forms of credit excluding hire purchase, 58% opted to deal with trading banks. Only 3% used a trading bank for hire purchases in comparison with 78% using a retail outlet.

Credit applications were most often in the respondents' names, except in the case of mortgages, when joint applications were made 52% of the time. Joint applications for loans occurred 29% of the time, while credit cards and hire purchases recorded 24% and 21% respectively.

Out of the 332 responses received, 82% indicated that their applications for credit had been successful, while 18% had been declined credit over the last five years. Several of the 60 respondents had been declined credit on more than one occasion and were therefore able to furnish more than one reason for being declined.

In terms of the reason given for being declined credit, 42% of the time "insufficient income" was provided as the grounds, whereas "insufficient collateral" recorded 16%, "student loan" 4%, "existing debt" 10%, "no credit history" 13% and "other" unknown reasons were recorded 15% of the time.

Those women declined credit were more likely to belong to an ethnic origin other than New Zealand European. Maori were represented more highly in the group declined credit with 19%. A third of the Maori respondents had been declined credit over the last five years.

Of those women declined credit, 57% were married, and the same percentage had children. Of the Maori women declined credit 73% recorded they were married, and 82% had children.

Only 15% of the sample population (51 out of 332 respondents) has, or has had, a student loan. Most respondents (86%) indicated that they had borrowed $25,000 or less against the student loan scheme.

Over the last ten years, 37% of respondents who have, or have had, student loans failed to obtain access to credit. Only two of 19 students in this sub-group indicated that having a student loan was the grounds for which their credit application was declined.
Owning assets which could be used in support of a credit application was not seen as being more influential on the success rate of an application than income earning potential and having dependents and current level of debt.

Respondents provided anecdotal evidence of gender bias, and the impact of having dependents, including the disadvantage to single parents. Improvements in women's access to credit were also noted.

The information collected in this survey is very limited in that there is not sufficient data to compare the accessibility and availability of credit for women to that for men. Furthermore, the questions used in the survey were particularly general.

The survey findings indicate some statistical significance for Maori women and having dependent children may also have some influence over women's ability to access credit. However, due to the size of the sample population and the broad design of this survey, potential barriers can only be implied and not categorically confirmed. These findings fall within the expectations of this project.