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Empowering women via microfinance in fragile states

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Author Info

  • Beatriz Armendariz
  • Nigel Roome

Abstract

Ever since microfinance was popularized in the mid-1970s in Bangladesh one of its salient features has been the overwhelming representation of women, mostly in fragile states. Institutional structures and social norms in such states are very rigid. Nevertheless, the trend has increased steadily, particularly during the 1980s. According to 2006 Microcredit Summit Campaign Report, seven out of ten microfinance clients are women. Millions of these women are married or live with a partner, and many have children. Relative to initial lending practices by the Grameen Bank in Bangladesh, the bias in favor of loans to women in microfinance has been accompanied by an increasing trend to exclude men from microfinance services, particularly in the context of loans to those with very low income levels. The practice of exclusion might however prove to be counterproductive for it can generate frictions within households, as men feel increasingly threatened in their role as primary breadwinners within the household. In this essay we argue that the promotion of women in microfinance initiatives and the bias against men is taking place in the absence of solid empirical evidence on the effects of this approach on the balance of power in households and on the health, education and well-being of all household members. We hold to these to be key aspects of development. We further argue that this issue deserves research attention given the possibility of unforeseen outcomes and adverse consequences that run counter to the goal to encourage microfinance initiatives as a means to promote development. To clarify the central issues, on the one hand, higher household income in the hands of women might increase health and education for women and their household members –we call this the women-empowerment effect. On the other hand, the exclusion of men from access to subsidized finance might create frictions, and rebound effects that diminish the supportive role women play for their spouses and wider household members in the production of health and education – we call this the women-disempowering effect. In the event that the latter effect dominates over the former, then subsidized microfinance for women might have no overall positive impact, or even worse, a negative impact on health and education at the household level and the women in households. An even more challenging issue is to better understand what influence social and institutional conditions exercise on the empowerment and disempowerment effects experienced by women in microfinance initiatives and the subsequent outcomes in terms of development. This issue matters because microfinance initiatives are specifically directed at household level, and, yet prevailing social and institutional norms are determined at community or societal level. In the circumstances where social and institutional conditions dominate the effects of microfinance initiatives it would imply that microfinance projects might lead to better outcomes when they are accompanied by measures for institutional capacity building that promote the rights and role of women in society. This essay is structured as follows. First, it provides an overview of what we currently know about microfinance, gender, health and education in the context of Bangladesh, where most research has been conducted. Second, some anecdotal evidence from Bangladesh and Africa on the notion of microfinance empowerment is presented and discussed. This raises questions about the influence of institutional structures and norms on the enhanced capacity of women to assert their role as the main providers of health and education, mainly arising from the fact that the empowerment of women generates frictions with their partners, which in turn leads to a potential disempowerment effects. It also suggests that institutional structures and norms serve to constrain the outcomes of microfinance initiatives. Third, anecdotal evidence from Chiapas, in southern Mexico, is outlined which provided the basis for empirical research on new approaches to microfinance now being undertaken in the region. Fourth, the essay outlines this experimental intervention in southern Mexico, where the women borrowers in a microfinance initiative can invite their spouses to be part of women-only solidarity groups as borrowers, in order to see whether potential frictions could be eliminated as a way better to enhance women empowerment and provide for improved access to health and education at the household level. The main challenges of implementing this type of intervention as revealed through the experience to date in the South Mexican experiment are described. Finally, a fifth section spells out some concluding remarks.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 08-001.RS.

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Length: 24 p.
Date of creation: 2008
Date of revision:
Publication status: Published by: Université Libre de Bruxelles, Solvay Business School, Centre Emile Bernheim (CEB)
Handle: RePEc:sol:wpaper:08-001

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  1. Udry, Christopher, 1996. "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1010-46, October.
  2. Khandker, S.R. & Khalily, B. & Khan, Z., 1995. "Grameen Bank: Performance and Sustainability," World Bank - Discussion Papers 306, World Bank.
  3. Engle, Patrice L., 1993. "Influences of mothers' and fathers' income on children's nutritional status in Guatemala," Social Science & Medicine, Elsevier, vol. 37(11), pages 1303-1312, December.
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  6. Beatriz Armendariz & Jonathan Morduch, 2007. "The Economics of Microfinance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262512017, December.
  7. Thomas, D., 1995. "Like Father, Like Son, Like Mother, Like Daughter, Parental Resources and Child Height," Papers 95-01, RAND - Reprint Series.
  8. Mark M. Pitt & Shahidur R. Khandker, 1998. "The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 958-996, October.
  9. Duraisamy, P., 1992. "Gender, Intrafamily Allocation of Resources and Child Schooling in South India," Papers 667, Yale - Economic Growth Center.
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Cited by:
  1. Thi Minh-Phuong Ngo & Zaki Wahhaj, 2010. "Microfinance and Gender Empowerment," CSAE Working Paper Series 2010-34, Centre for the Study of African Economies, University of Oxford.

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