Factors influencing women's empowerment on microcredit borrowers: a case study in Bangladesh

Abstract

Women's empowerment in relation to microcredit programmes is a prominent issue in the literature of microcredit. Not only the founder of the Grameen Bank is awarded the 2006 Nobel Peace Prize on the microcredit programme of Bangladesh but it has also been a topic of great interest to researchers since its introduction in mid-1970s. This study views women's empowerment from an emancipation perspective. The study uses quasi-experimental approach to compare women's empowerment between microcredit borrowers and non-borrowers. Using control-group method (non-borrowers from non-programme villages), this study identifies factors that influence women's empowerment. It also examines the impact on women's empowerment of borrowers having different levels of income. Results show that non-borrowers are equally empowered as microcredit borrowers. It has also been found that age and education levels of women are significant factors in such an empowerment.

Keywords:

• microcredit
• empowerment
• Grameen Bank
• borrowers
• factors
• probit model

JEL classifications:

• D10
• O30

Acknowledgements

We would like to thank an anonymous referee for many valuable comments on an earlier version of this paper. Any errors are our responsibility.

Notes

∗∗∗Significant at 1% level

∗∗significant at 5% level

∗ significant at 10% level; figures in parentheses show the z-values.

∗∗∗Significant at 1% level

∗∗significant at 5% level

∗significant at 10% level; figures in parentheses show the z-values.

∗∗∗Significant at 1% level

∗∗significant at 5% level

∗ significant at 10% level; figures in parentheses show the z-values.

1. The poverty line is the level of income below which one cannot afford to purchase all the resources one requires to live. People who have an income below the poverty line by definition have no discretionary disposable income (Sen, 1976).

2. Power distance is a cultural index derived by sociologist Geert Hofstede, (2001). It measures how much respect a culture has for the authority. The Arabic-speaking nations, Latin America, Russia and nearly all of Asia are high in power distance. Most of Europe, Canada, Australia and Israel are low in power distance. Japan and Mediterranean Europe fall in the middle. In a high-power-distance culture, its acceptable for a supervisor to display his authority, while in a low-power-distance culture, supervisors are expected to treat employees respectfully.

3. The responses are transformed into binary variables wherever necessary; for instance, ‘general knowledge’ example discussed above, the ‘incorrect’ and ‘don't know’ responses are merged into one category.

4. See http://www.un.org/popin.

5. Detailed derivations of each individual index would be provided upon request.

6. Questionnaire is available for review on request.

7. Correlation matrix of the variables is provided as Table 3.

8. Assets are physical assets such as furniture, radio, television and other household items except land and houses valued at market price.

9. The reason for borrowers having land or house in their own name could be due to the new rule introduced by the Grameen Bank that if a person has to take a loan for housing or purchasing a piece of land, his wife's name has to be included in the property. In general, almost all loans are granted towards females.

10. By the term ‘managing savings’ we considered that the female can save her money on her own will and spend from the savings, if necessary, without consulting her male counterpart.

11. An alternative to logistic regression analysis is probit analysis. The term ‘probit’ was introduced in the 1930s by Chester Bliss and stands for probability unit. Probit estimation uses the cumulative normal probability distribution (Gujarati 1992, p. 356).

12. White (1980) has derived a heteroscedasticity consistent covariance matrix estimator that provides correct estimates of the coefficient covariance in the presence of heteroscedasticity of unknown form (Gujarati 1992, p. 449).

13. We know that the decision to participate in a microcredit programme is self-selective. This type of self-selection problem may be corrected through Heckman's two-stage correction procedure. The problem with the Heckman procedure is to identify suitable instruments. Since no suitable instruments have been identified which would permit the use of Heckman procedure to correct this self-selection bias, we did not look at the causal impact of programme participation in this study.