Empowering female entrepreneurs through access to digital microfinance services

Abstract

PurposeThe concept of women’s empowerment is widely regarded as a crucial factor in facilitating the integration and involvement of women in the development process. The cornerstone of women’s empowerment is widely acknowledged to be social and political engagement coupled with economic independence. This research aims to contribute to understanding the effects of access to digital financial services by microfinance institutions (MFIs) in Indonesia on women empowerment, specifically focusing on women at the bottom of the economic pyramid. This empowerment is assessed through social, political and economic dimensions.Design/methodology/approachThis study utilizes logistic regression (LR) to examine the effect of access to microfinance digital financial services on the social, political and economic determinants of women’s empowerment. The analysis is based on the threshold theory of decision-making. The present research includes a sample of 1,644 female entrepreneurs, namely ultra-micro small and medium-sized enterprises (SMEs), actively participating in microfinance activities in Daerah Istimewa Yogyakarta, Nusa Tenggara Barat and Sulawesi Selatan.FindingsThe findings indicate a statistically significant effect between access to credit and the two variables under investigation, namely social and economic empowerment. However, no significant effect was seen between credit access and women’s empowerment. Following this, a positive effect has been identified between credit access and several aspects of women’s empowerment.Research limitations/implicationsThe research establishes a framework and substantiates that women’s empowerment relies on economic autonomy, social engagement and political involvement. MFIs have been identified as significant contributors to this process. This will assist practitioners in formulating policy and implementing interventions to promote women’s empowerment, particularly in the context of digital microfinance. The results of this study will provide valuable insights for guiding future research endeavors in this field.Originality/valueThe work exhibits originality and serves as a valuable resource for those who recognize and appreciate its significance. This report is the first study to examine the correlation between female entrepreneurs’ access to digital MFIs and women’s empowerment dimensions.