Microcredit and Empowerment of Urban Women: A Study from Eastern India

Abstract

In credit markets where imperfection is the rule rather than the exception, collateral has evolved as an established practice by institutional lenders to address the issues of adverse selection and moral hazard associated with credit contracts. In spite of a continuous government thrust to provide fi nancial services to the excluded, institutional lenders are often not keen to lend to the marginalized population, who usually lack marketable collateral and creditworthy projects ( Fisher and Sriram, 2002 : 40). While borrowers are confronting transaction costs ( Mahajan and Ramola, 2003 ), commercial banks are asking for more collateral, blaming rising default rates ( Basu, 2006 ), which seem to be limiting credit provision. In this context, microcredit has obviated the need for marketable collateral by instituting joint liability and peer pressure as a collateral substitute ( Besley and Coate, 1995 ). It arranges for door-step delivery of small amounts of credit not only for productive investment, but also for consumption smoothing and contingency ( Morduch, 1999 ). Th us, microcredit aims to cover the economically underprivileged who face diffi culty in accessing institutional credit for emancipation from the vicious poverty cycle, social inclusion, and empowerment ( Milana and Ashta, 2012 ). But historically, women have formed the major clientele of microcredit: according to a recent estimate (see Reed, 2011 ), around 75% of microcredit clients are women. Th e rationale behind this gender-specifi c microcredit delivery mechanism has been captured in the existing literature (for a detailed review see Cheston and Kuhn, 2002 ) as follows:First, women are most vulnerable and among the poorest of the poor. Second, women have minimum access to fundamental human rights.The male inclusivity of the change process has established the program on a strong footing.A bottom-up approach helped the program to cater for the needs of the local community.The success of the program was also crafted through the selfselection of business activity by loaned members.1 JEL classifi cation: G21; J16; P36.A positive social and fi nancial change is detected in the lives of women members of the government-sponsored G olden J ubilee U rban E mployment S cheme.

Microfinance development in Armenia: Sectoral characteristics and problems

“…Although the evidence to date is not conclusive about the impact of microcredit on women's empowerment (Pal & Dutta, 2015), our findings suggest that even if local MFIs systematically make efforts to empower women by offering them credit opportunities, it is difficult to work out why the number of women in the client portfolio is lower than expected. Some international organizations (e.g., Eclof) require the credit portfolio to include 50% of women borrowers and other local organizations (e.g., Kamurj and Aregak) deliberately targeted women at the beginning of their activity; nonetheless the proportion of women borrowers is much lower than the proportion of men taking out loans (especially in rural areas).…”

Microfinance Participation, Control Over Resources, and Justification of IPV: Results From a Nationally Representative Sample of Women

“…Finally, the present study should be seen with studies that question the role of empowerment in general, and microfinance in particular, in reducing IPV to provide at least a partial explanation for which IPV rates do not fall with microfinance participation (Chin, 2012; Junankar et al, 2009; Murshid et al, 2016; Pal & Dutta, 2015; Rahman, Hoque, & Makinoda, 2011; Schuler, Lenzi, Nazneen, & Bates, 2013).…”

“…The findings of the present study revealed that microfinance participants are perhaps not much different from nonparticipants in terms of justification of IPV, indicating that the spillover effect of microfinance does not include changes in attitude towards IPV. This drives home the point that a loan by itself cannot change mind-sets, and that national development plans that aim to empower women should be specific about goals, instead of using empowerment as a catch-all phrase to mean positive outcomes for women (Hanchett, 1997; Junankar et al, 2009; Pal & Dutta, 2015).…”

Social inequality and access to social capital in microfinance interventions

“…gender and caste in India) that might keep some individuals away from accessing group-based social capital in the form of SHGs. Some empirical studies with respect to Indian microfinance have discussed the effects of household assets (land holding and cattle possession) and networks with community leader in accessing the credit market in policy formulation (Pal and Laha, 2015), the role of consumption behavior and market linkage in formal versus informal credit access and the failure of formal credit institutions in reaching the low-income groups (Pal, 2012; Pal and Dutta, 2015). Yet, these empirical works fall short of analyzing access to microfinance groups that play a crucial role in access to banking institutions and facilities in long run.…”