Impact of microfinance on women's empowerment: a case study on two microfinance institutions in Sri Lanka

Abstract

This study investigates the impact of microfinance on poverty and socio-economic vulnerability of women and the ability to form social capital through group-based micro loans. The study uses four criteria to examine the impact of microfinance on poverty and vulnerability of women borrowers. The four criteria are, access, creation and control over private resources; freedom of decision making at home; self-confidence on socio-economic activities; and status in community and family. The study assumes that if these four variables have positively affected a woman, then she is empowered by microfinance received. The study uses three logistic regression models and a women's empowerment index to analyse women's empowerment. The logistic results revealed that the household income level before taking microcredit, age of the household head and market availability for products have been significant in affecting women's empowerment and reducing vulnerability. The disaggregated and overall Women Empowerment Indices (WEIs) clearly illustrate a considerable development after joining the microfinance institutions (MFIs). The analysis found that if the woman owned the loan and acted as a conduit of credit, it had a positive and significant impact on her ability to make decisions at home.

Microfinance as a Strategy of Empowering the Conflict-Affected Communities in Sri Lanka

“…These services are increasingly being recognized as an important component of microfinance intermediation as they are associated with the viability and sustainability of the enterprise. These findings are consistent with Remenyi (2002), Colombage, Ahmad, & Chandrabose (2008) and Herath et al (2016) highlighted that there is a significant difference between households who received credit with credit-plus services and those that received credit without credit-plus services on income increases. Credit-plus services benefitted the households to improve their level of income by the investment projects.…”

“…Microfinance services enable women to develop their own income-generating new economic activities, and thereby making them play a greater role in decision making (as greater bargaining power within the household and leadership in the community) and making attitudinal changes (increased selfreliance, self-confidence and self-worth). Further, small groups, which form the foundation of most microfinance programs, empower women through mutual support, exchanging of new ideas, group responsibility and leadership (Herath et al, 2016).…”

The impact of husbands' involvement in goal‐setting training on women's empowerment: First evidence from an intervention among female microfinance borrowers in Sri Lanka

“…The researchers suggest that women's special role as female entrepreneurs should be addressed (Berge et al, 2015). Research conducted in Sri Lanka also suggests that programmes need to address both business skills and women's position in society to stimulate women's business success (Herath, Guneratne, & Sanderatne, 2016).…”

Determinants of Microfinance Loan Default: An Empirical Investigation in Sri Lanka

“…Today there are many institutions offering microfinance services, particularly to the poorest households in the country [10]. These institutions include licensed commercial banks, licensed finance companies, co-operative rural banks, thrift and credit co-operatives societies, Divineguma Banks, other community-based organizations, microfinance companies and nongovernmental organizations (NGOs).…”