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Microfinance and Female Empowerment

Author

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  • Sylvain Dessy
  • Jacques Ewoudou

Abstract

In 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.

Suggested Citation

  • Sylvain Dessy & Jacques Ewoudou, 2006. "Microfinance and Female Empowerment," Cahiers de recherche 0603, CIRPEE.
  • Handle: RePEc:lvl:lacicr:0603
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    File URL: http://www.cirpee.org/fileadmin/documents/Cahiers_2006/CIRPEE06-03.pdf
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    References listed on IDEAS

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    Cited by:

    1. Aggarwal, Raj & Goodell, John W. & Selleck, Lauren J., 2015. "Lending to women in microfinance: Role of social trust," International Business Review, Elsevier, vol. 24(1), pages 55-65.
    2. Aggarwal, Raj & Goodell, John, 2013. "Lending to women in microfinance: influence of social trust and national culture Lending to women in microfinance: influence of social trust and national culture," Working Paper 1317, Federal Reserve Bank of Cleveland.

    More about this item

    Keywords

    Microfinance; female entrepreneurship; supermodular games;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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