Microfinance and women empowerment in Bangladesh: Impact in economic, social and political dimensions.
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This thesis empirically examines the impact of microfinance services on women’s economic, social and political empowerment in Bangladesh. Microfinance is alternative financial services for poor people, predominantly for women as they are more poverty-stricken and discriminated in Bangladesh. These services are more likely to be flexible than formal financial services so that poor women can afford and use for productive activities which can generate income either for them or for their families. Thus, women may create a chance to uplift themselves from current deprived conditions in many aspects include financial, familial, social and public life. Therefore, this thesis aims to assess whether microfinance contributes to women’s empowerment, specifically in economic, social and political dimensions. A sample of 316 women clients of two microfinance institutions, Grameen Bank and BRAC in Bangladesh were selected. 285 questionnaires were completed and returned by the respondents and that constituted the data for the study. Several data analysis methods were deployed to analyse the collected data. It has been found that women in Bangladesh are empowered economically to a certain extent by the microfinance services. Economic empowerment was measured through women’s household income, savings and control over finances. Regarding this dimension of empowerment, findings of this thesis suggests the relationship of the amount of loan with household income, savings and control over finances, nevertheless, there is no relationship found with women’s geographic areas (rural, semi-urban and urban). Women’s engagement with income-generating activities and their long-term membership escalate the probability of increasing household income. In terms of women’s savings, findings show that the larger the amount of loan, the more the probability of increasing their savings. Increase in household income and increase in women’s savings are added as independent variables to assess their impact in women’s control over finances. Findings show that women with increased household income and savings have more probabilities in increasing control over finances. Likewise, women’s engagement with income-generating activities intensify the probability of increasing control over finances. As far as age is concerned, middle aged women have more chance of increasing control comparatively. Secondly, it has been found that women in Bangladesh are not socially empowered by the financial services of microfinance institutions. Social empowerment was measured through women’s agency of decision-making and mobility. To assess the causal relationship, this research has deployed the amount of loan, increase in household income and women’s geographic areas as key independent variables. Other variables include women’s literacy and communication skills used as proxies of human and social capital. Findings of thesis suggest that both amount of loan and increase in household income are found insignificant. However, women’s area is found statistically significant for both agency of decision-making and mobility. Relationship is found between women’s literacy skills and agency of decision-making. Nonetheless, bizarrely, women’s engagement with income-generating activities have negative relationship with their mobility. Women’s agency of decision-making was used as an independent variable to assess the impact on mobility where a positive relationship is found between them. Finally, it has been found that women in Bangladesh are not politically empowered by the financial services of microfinance institutions. Political empowerment was measured through women’s community and political participation. Findings of this thesis suggest that neither the amount of loan nor the communication skills is found statistically significant. Women’s engagement with income-generating activities is found statistically significant, however, it shows the negative relationship. Nevertheless, women’s freedom of movement is found to have a relationship with political empowerment. The findings show that women who have disagreed in terms of increasing mobility after joining microfinance, they have lower probability to increase their political empowerment. This study acknowledges the importance of women’s access to financial resources to their economic development and empowerment. It also highlights the importance of non-financial achievement during their involvement with microfinance such as women’s human capital for their social empowerment. It infers that women’s access to financial resources are fundamental for their economic empowerment, however not for social and political empowerment. With respect to the policy implication, government’s policy may incorporate poor women to the public financial system so that they receive financial capital when they need. Women’s easy access to resources is fundamental to the economic development of the country as they constitute half of the country’s population. Microfinance institutions might consider amplifying the loan size. Following women’s access to finance, policy of microfinance institutions should include stringent monitoring system so that it is actually women who are in control of the loan and utilise it in productive ways. Microfinance institutions may consider initiating additional programmes such as intense literacy, education and business development training which might be conducive for women’s social empowerment. Also, inclusion of political education and leadership training would increase the political knowledge of women directly and inspire them to participate in political activities. Nevertheless, implementing these programmes will cost additional expenses, therefore, government and the donors may join the microfinance institutions to patronise these programmes for improved and resilient human resources of the country. To the researcher’s knowledge, in Bangladesh, this study is possibly the first in the literature of microfinance and empowerment which shows the impact of microfinance in multiple dimensions simultaneously. Empowerment studies were frequently studied in the context of economic dimension; however, social and political dimensions are often neglected. Only three studies, for instance, Hashemi et al., (1996) in Bangladesh, Deininger and Liu (2013) in India and Goldman and Little (2015) in Tanzania investigated the social and political dimensions to the researcher’s knowledge. Nevertheless, none of these studies did not assess the economic aspects such as impact on household income and savings through microfinance which are major indicators of economic empowerment. Secondly, this study investigates the impact of access to credit on three settings such as in rural, semi-urban and urban area to see whether there are any differences based on different locations. To the researcher’s knowledge, in Bangladesh, this is possibly the first study of microfinance and empowerment in multiple dimensions that considered this variable. Thirdly, empirical studies of microfinance and empowerment in Bangladesh have rarely been analysed using economic theory while it has the potentiality to generate useful insights. This study has the application of an economic theory, for instance, women empowerment is analysed using women’s fall-back or breakdown position in this study within cooperative bargaining model proposed by McElroy and Horney (1981). Lastly, findings of this study suggest that financial services of microfinance are conducive for economic empowerment, but not for social and political empowerment. Thus, this research contributes to the literature.