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Credit where credit's due: The enabling effects of empowerment in Indian microfinance

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  • Saha, Bibhas
  • Sangwan, Navjot

Abstract

We utilise primary data collected from a North Indian village to examine the impact of women’s empowerment on their creditworthiness, as measured by their total annual loan amounts. Our key explanatory variable – an empowerment index – has been constructed using four factors – economic, social, interpersonal and political. We find that more empowered women received greater cumulative loans. We have instrumented empowerment by the sex of the borrower’s first child being male. It seems that in the male-dominated environment of North India, the ‘luck’ of giving birth to first child as a son helps a woman seize opportunities for empowerment. These village-level findings regarding empowerment are consistent with the results we obtain for the whole of North India using a separate and national dataset. We also show that for the rest of India, it is education and not empowerment, that is a more important determinant of loan volumes.

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  • Saha, Bibhas & Sangwan, Navjot, 2019. "Credit where credit's due: The enabling effects of empowerment in Indian microfinance," World Development, Elsevier, vol. 122(C), pages 537-551.
    • Handle: RePEc:eee:wdevel:v:122:y:2019:i:c:p:537-551
    DOI: 10.1016/j.worlddev.2019.06.009
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    2. Sajeda Pervin & Mohammad Nazari Ismail & Abu Hanifa Md Noman, 2023. "Does Microfinance Singlehandedly Empower Women? A Case Study of Bangladesh," SAGE Open, , vol. 13(2), pages 21582440221, May.
    3. Klein, Matthew J. & Barham, Bradford L. & Wu, Yuexuan, 2019. "Gender Equality in the Family Can Reduce the Malaria Burden in Malawi," Staff Paper Series 594, University of Wisconsin, Agricultural and Applied Economics.
    4. Navjot Sangwan & Luca Tasciotti, 2023. "Losing the Plot: The Impact of Urban Agriculture on Household Food Expenditure and Dietary Diversity in Sub-Saharan African Countries," Agriculture, MDPI, vol. 13(2), pages 1-20, January.

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    More about this item

    Keywords

    Women’s empowerment; Microfinance; Instrumental variable; India; Asia; Principal component analysis;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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