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Microfinance and Gender Empowerment

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  • Zaki Wahhaj
  • Thi Minh-Phuong Ngo

Abstract

In the past 30 years, microfinance has carried many promises of social and economic transformation, with the shift towards targeting women being seen as a major strategic move through which the promise of social development could be most effectively delivered.� However, ethnographic studies have shown that many women relinquish the use of their loans to male members of the household, belying the empowering promise of microfinance.� We propose a simple model of household bargaining which examines how providing women with credit affects production and decision-making power in the household.� Following Bergstrom (1996), we account for the roles of both divorce and non-cooperation in the household as relevant fall-back options in the bargaining strategy of each spouse.� We show that the introduction of a microcredit programme is likely to have widely heterogeneous impacts, and can adversely affect the bargaining power of some women.� We demonstrate that access to credit allows a woman to strengthen her bargaining position through an expansin of her autonomous activities (the causal mechanism hoped for) only in a limited number of cases: when she is able to invest her new capital profitably in an autonomous activity, and her husband has no alternative activity in which the same capital would generate comparable returns, or lacks the power to overrule her preferred investment choice.� The two cases in which it is most likely that the availability of credit would enable the woman to strengthen her bargaining position within the household are (i) when capital can be invested in a cooperative activity to which both spouses contribute in an important way, and (ii) when a large share of the household budget is devoted to expenditures on household public goods.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number CSAE WPS/2010-34.

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Date of creation: 01 Nov 2010
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Handle: RePEc:oxf:wpaper:csae-wps/2010-34

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Citations

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Cited by:
  1. Ngo, Thi Minh-Phuong & Wahhaj, Zaki, 2012. "Microfinance and gender empowerment," Journal of Development Economics, Elsevier, vol. 99(1), pages 1-12.
  2. Agbodji, Akoete Ega & Batana, Yele Maweki & Ouedraogo, Denis, 2013. "Gender inequality in multidimensional welfare deprivation in west Africa : the case of Burkina Faso and Togo," Policy Research Working Paper Series 6522, The World Bank.
  3. Agenor, Pierre-Richard & Canuto, Otaviano, 2013. "Gender equality and economic growth in Brazil : a long-run analysis," Policy Research Working Paper Series 6348, The World Bank.

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