Microfinance and Female Empowerment
AbstractIn the informal economy of developing countries, female entrepreneurs face a comparative disadvantage for operating high-productivity activities, owing to the prevalence of patriarchal forms of business regulations. Yet, for microfinance institutions (MFIs) to succeed in enhancing female empowerment, increased access to credit must enable female entrepreneurs to tap into the range of high-productivity activities. So when the costs of legality are too high in developing countries, and the informal economy becomes the only affordable venue for operating a business venture, this paper shows that access to microfinancee services becomes only necessary, but not sufficient for female empowerment. Based upon a game-theoretic model of activity choices by ex ante homogeneous women, we argue that conditioning well-trained women's access to credit to the adoption of high-productivity activities may enable MFIs to induce the emergence of networks of female entrepreneurs large enough to mitigate patriarchal practices that raise the costs of operating such activities in the informal economy.
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Bibliographic InfoPaper provided by CIRPEE in its series Cahiers de recherche with number 0603.
Date of creation: 2006
Date of revision:
Microfinance; female entrepreneurship; supermodular games;
Find related papers by JEL classification:
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-02-05 (All new papers)
- NEP-CFN-2006-02-05 (Corporate Finance)
- NEP-ENT-2006-02-05 (Entrepreneurship)
- NEP-FMK-2006-02-05 (Financial Markets)
- NEP-MFD-2006-02-05 (Microfinance)
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