The Impact of microfinance on poverty reduction through women’s empowerment
https://doi.org/10.35877/454RI.qems3864
Keywords:
microfinance, women's empowerment, poverty reduction, Self-Help Groups, gender equality, financial inclusion
Viewed = 0 time(s)
Viewed = 0 time(s)
Abstract
This study investigates the impact of microfinance on women's empowerment and poverty reduction in Nepal's Kathmandu Valley. The research employs a mixed-methods approach, utilizing structured questionnaires with five-point Likert scales to collect data from 294 women participating in Self-Help Groups (SHGs), selected through purposive sampling. Descriptive and inferential statistical techniques, including Cronbach’s alpha reliability testing, ANOVA, regression, and correlation analysis, were applied to assess multidimensional outcomes. The results reveal that microfinance has the strongest positive impact on socioeconomic status (β=1.048, p<0.001), explaining 69.5% of empowerment variance (Adj. R²=0.695), while showing a negative association with household decision-making (β=-0.265, p<0.001). A key finding highlights the divergence between perceived financial benefits (mean scores 3.93-4.00) and their statistical insignificance in regression models (p=0.926), suggesting that economic interventions alone may be insufficient. The study demonstrates methodological rigor with high reliability (α>0.7) and robust multivariate analysis. The findings indicate that microfinance significantly influences socioeconomic empowerment but has complex effects on other dimensions of women's lives, underscoring the need for integrated approaches combining financial and social interventions.
References
Akinsemolu, A. A., & Olukoya, O. A. (2020). The role of financial literacy in the effectiveness of microfinance programs. Journal of Development Studies, 56(3), 456–472. https://doi.org/10.1080/00220388.2019.1632436
Armendáriz, B., & Roome, N. (2008). Gender empowerment in microfinance. World Development, 36(5), 913–929. https://doi.org/10.1016/j.worlddev.2007.09.009
Banerjee, A., Duflo, E., Glennerster, R., & Kinnan, C. (2015). The miracle of microfinance? Evidence from a randomized evaluation. Quarterly Journal of Economics, 130(1), 175–202. https://doi.org/10.1093/qje/qju032
Banerjee, A., Karlan, D., & Zinman, J. (2015). Six randomized evaluations of microcredit: Introduction and further steps. American Economic Journal: Applied Economics, 7(1), 1–21. https://doi.org/10.1257/app.20140287
Barua, A. (2012). Microfinance and poverty reduction: Evidence from Bangladesh. Journal of South Asian Development, 7(2), 125–145. https://doi.org/10.1177/0973174112448961
Bateman, M. (2010). Why doesn't microfinance work? The destructive rise of local neoliberalism. Zed Books.
Bateman, M., & Chang, H. J. (2012). Microfinance and the illusion of development: From hubris to nemesis in thirty years. World Economic Review, 1(1), 13–36.
Benería, L. (2003). Gender, development, and globalization: Economics as if all people mattered. Routledge.
Blumberg, R. L. (2005). Women’s economic empowerment as the “magic potion” of development? Paper presented at the 100th Annual Meeting of the American Sociological Association, Philadelphia, PA.
Brody, C., Hoop, T. D., Vojtkova, M., Warnock, R., Dunbar, M., Murthy, P., & Dworkin, S. L. (2017). Economic self-help group programs for improving women's empowerment: A systematic review. Campbell Systematic Reviews, 13(1), 1–182. https://doi.org/10.4073/csr.2017.1
Cak, M., & Degermen, D. (2015). Microfinance and women’s empowerment: Evidence from Turkey. Feminist Economics, 21(4), 1–30. https://doi.org/10.1080/13545701.2014.927589
Chowdhury, M. J. A. (2013). Microfinance and women’s empowerment: A case study of Bangladesh. Journal of International Development, 25(1), 45–62. https://doi.org/10.1002/jid.1771
Duflo, E. (2012). Women empowerment and economic development. Journal of Economic Literature, 50(4), 1051–1079. https://doi.org/10.1257/jel.50.4.1051
Duvendack, M., Palmer-Jones, R., Copestake, J. G., Hooper, L., Loke, Y., & Rao, N. (2011). What is the evidence of the impact of microfinance on the well-being of poor people? EPPI-Centre, University of London.
Elson, D. (1999). Labor markets as gendered institutions: Equality, efficiency and empowerment issues. World Development, 27(3), 611–627. https://doi.org/10.1016/S0305-750X(98)00147-8
Ferber, M. A., & Nelson, J. A. (2003). Feminist economics today: Beyond economic man. University of Chicago Press.
Garikipati, S., Boudot, C., & Roesch, M. (2017). Empowering women through microfinance: Evidence from India. Journal of Development Studies, 53(5), 684–699. https://doi.org/10.1080/00220388.2016.1205734
Goetz, A. M., & Gupta, R. S. (1996). Who takes the credit? Gender, power, and control over loan use in rural credit programs in Bangladesh. World Development, 24(1), 45–63. https://doi.org/10.1016/0305-750X(95)00124-U
Hashemi, S. M., Schuler, S. R., & Riley, A. P. (1996). Rural credit programs and women’s empowerment in Bangladesh. World Development, 24(4), 635–653. https://doi.org/10.1016/0305-750X(95)00159-A
Jamaluddeen, and Serene Alam. (2022). The Impact of microfinance on poverty reduction through women’s empowerment. Sachetas, 1(4), 21-31. https://doi.org/:10.55955/140002.
Johnson, S. (2005). Gender relations, empowerment and microcredit: Moving forward from a lost decade. The European Journal of Development Research, 17(2), 224–248. https://doi.org/10.1080/09578810500130776
Kabeer, N. (1999). Resources, agency, achievements: Reflections on the measurement of women’s empowerment. Development and Change, 30(3), 435–464. https://doi.org/10.1111/1467-7660.00125
Kabeer, N. (1999). Resources, agency, achievements: Reflections on the measurement of women’s empowerment. Development and Change, 30(3), 435–464. https://doi.org/10.1111/1467-7660.00125
Kabeer, N. (2001). Conflicts over credit: Re-evaluating the empowerment potential of loans to women in Kabeer, N. (2003). Gender mainstreaming in poverty eradication and the Millennium Development Goals. Commonwealth Secretariat.
Kabeer, N. (2005). Gender equality and women’s empowerment: A critical analysis of the third Millennium Development Goal. Gender & Development, 13(1), 13–24. https://doi.org/10.1080/13552070512331332273
Kabeer, N. (2010). Women’s empowerment, development interventions and the management of information flows. IDS Bulletin, 41(6), 105–113. https://doi.org/10.1111/j.1759-5436.2010.00188.x
Karlan, D., & Zinman, J. (2011). Microcredit in theory and practice: Using randomized credit scoring for impact evaluation. Science, 332(6035), 1278–1284. https://doi.org/10.1126/science.1200138
Khan, R. E. A., & Bibi, S. (2011). Microfinance and women empowerment: A case study of District Bahawalpur (Pakistan). African Journal of Business Management, 5(11), 4091–4097.
Knowles, J. C., & Luke, N. (2018). Microfinance and women’s empowerment: Evidence from India. World Development, 112, 1–14. https://doi.org/10.1016/j.worlddev.2018.07.005
Kumar, S., & Divya, S. (2021). Microfinance and women’s empowerment: A global perspective. Journal of Social Economics, 48(2), 200–215.
Leach, F., & Sitaram, S. (2002). Microfinance and women’s empowerment: A lesson from India. Development in Practice, 12(5), 575–588. https://doi.org/10.1080/0961452022000016071
Ledgerwood, J. (1999). Microfinance handbook: An institutional and financial perspective. World Bank.
Mahmood, S. (2011). Microfinance and women’s empowerment in Bangladesh: A review of the evidence. Journal of Development Studies, 47(12), 1789–1807. https://doi.org/10.1080/00220388.2010.492863
Manjoor, A., & Mander, H. (2009). Women and microfinance: Lessons from the field. Sage Publications.
Mayoux, L. (2000). Micro-finance and the empowerment of women: A review of the key issues. International Labour Organization. https://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_117993.pdf
Mayoux, L. (2001). Tackling the down side: Social capital, women’s empowerment and micro-finance in Cameroon. Development and Change, 32(3), 435–464. https://doi.org/10.1111/1467-7660.00212
Morduch, J. (1999). The microfinance promise. Journal of Economic Literature, 37(4), 1569–1614. https://doi.org/10.1257/jel.37.4.1569
Morduch, J. (2000). The microfinance schism. World Development, 28(4), 617–629. https://doi.org/10.1016/S0305-750X(99)00151-5
Morduch, J., & Haley, B. (2002). Analysis of the effects of microfinance on poverty reduction (NYU Wagner Working Paper).
Muhammad, A., Alam, M. M., & Mian, I. (2012). Impact of microfinance on women empowerment: An empirical evidence from rural Pakistan. International Journal of Academic Research in Business and Social Sciences, 2(5), 98–117.
NABARD. (2008). Status of microfinance in India 2007–08. National Bank for Agriculture and Rural Development. https://www.nabard.org
Nawaz, S. (2010). Microfinance and poverty reduction: Evidence from Pakistan. Pakistan Development Review, 49(4), 791–807.
Nawaz, S. (2015). Microfinance and women’s empowerment: A macro perspective. World Development, 66, 1–10. https://doi.org/10.1016/j.worlddev.2014.08.005
Panigraphy, R., & Bhuyan, D. (2006). Women’s empowerment through microfinance: A case study of Orissa. Economic and Political Weekly, 41(17), 1691–1697.
Pitt, M. M., & Khandker, S. R. (1998). The impact of group-based credit programs on poor households in Bangladesh: Does the gender of participants matter? Journal of Political Economy, 106(5), 958–996. https://doi.org/10.1086/250037
Pitt, M. M., Khandker, S. R., & Cartwright, J. (2006). Empowering women with microfinance: Evidence from Bangladesh. Economic Development and Cultural Change, 54(4), 791–831. https://doi.org/10.1086/503580
Putnam, R. D. (2000). Bowling alone: The collapse and revival of American community. Simon & Schuster.
Rahman, A. (2019). The dark side of microfinance: Over-indebtedness and exploitation in Bangladesh. Journal of Peasant Studies, 46(4), 793–816. https://doi.org/10.1080/03066150.2018.1552266
Rehman, H. (2007). Microfinance and women’s empowerment: A case study of rural India. Journal of International Women’s Studies, 8(4), 1–15.
Sen, A. (1997). Editorial: Human capital and human capability. World Development, 25(12), 1959–1961. https://doi.org/10.1016/S0305-750X(97)10014-0
Shankar, S. (2013). Microfinance and women’s empowerment: Evidence from South Asia. World Development, 42, 165–177. https://doi.org/10.1016/j.worlddev.2012.06.004
Sharma, M., & Nepal, R. (2021). Microfinance and poverty reduction in Nepal: A gendered perspective. Journal of Development Studies, 57(2), 234–250. https://doi.org/10.1080/00220388.2020.1806242
Solomon, B. (2021). Global poverty and gender inequality: Trends and challenges. Palgrave Macmillan.
Swain, R. B., & Wallentin, F. Y. (2009). Does microfinance empower women? Evidence from self‐help groups in India. International Review of Applied Economics, 23(5), 541–556. https://doi.org/10.1080/02692170903007540
United Nations. (2018). Principles for responsible microfinance. United Nations Capital Development Fund (UNCDF). https://www.uncdf.org
Vallabh, P., & Chatrath, A. (2006). Microfinance and women’s empowerment: A study of SHG-bank linkage program in India. Journal of Microfinance, 8(1), 45–70.
Yunus, M. (2007). Creating a world without poverty: Social business and the future of capitalism. PublicAffairs.
Armendáriz, B., & Roome, N. (2008). Gender empowerment in microfinance. World Development, 36(5), 913–929. https://doi.org/10.1016/j.worlddev.2007.09.009
Banerjee, A., Duflo, E., Glennerster, R., & Kinnan, C. (2015). The miracle of microfinance? Evidence from a randomized evaluation. Quarterly Journal of Economics, 130(1), 175–202. https://doi.org/10.1093/qje/qju032
Banerjee, A., Karlan, D., & Zinman, J. (2015). Six randomized evaluations of microcredit: Introduction and further steps. American Economic Journal: Applied Economics, 7(1), 1–21. https://doi.org/10.1257/app.20140287
Barua, A. (2012). Microfinance and poverty reduction: Evidence from Bangladesh. Journal of South Asian Development, 7(2), 125–145. https://doi.org/10.1177/0973174112448961
Bateman, M. (2010). Why doesn't microfinance work? The destructive rise of local neoliberalism. Zed Books.
Bateman, M., & Chang, H. J. (2012). Microfinance and the illusion of development: From hubris to nemesis in thirty years. World Economic Review, 1(1), 13–36.
Benería, L. (2003). Gender, development, and globalization: Economics as if all people mattered. Routledge.
Blumberg, R. L. (2005). Women’s economic empowerment as the “magic potion” of development? Paper presented at the 100th Annual Meeting of the American Sociological Association, Philadelphia, PA.
Brody, C., Hoop, T. D., Vojtkova, M., Warnock, R., Dunbar, M., Murthy, P., & Dworkin, S. L. (2017). Economic self-help group programs for improving women's empowerment: A systematic review. Campbell Systematic Reviews, 13(1), 1–182. https://doi.org/10.4073/csr.2017.1
Cak, M., & Degermen, D. (2015). Microfinance and women’s empowerment: Evidence from Turkey. Feminist Economics, 21(4), 1–30. https://doi.org/10.1080/13545701.2014.927589
Chowdhury, M. J. A. (2013). Microfinance and women’s empowerment: A case study of Bangladesh. Journal of International Development, 25(1), 45–62. https://doi.org/10.1002/jid.1771
Duflo, E. (2012). Women empowerment and economic development. Journal of Economic Literature, 50(4), 1051–1079. https://doi.org/10.1257/jel.50.4.1051
Duvendack, M., Palmer-Jones, R., Copestake, J. G., Hooper, L., Loke, Y., & Rao, N. (2011). What is the evidence of the impact of microfinance on the well-being of poor people? EPPI-Centre, University of London.
Elson, D. (1999). Labor markets as gendered institutions: Equality, efficiency and empowerment issues. World Development, 27(3), 611–627. https://doi.org/10.1016/S0305-750X(98)00147-8
Ferber, M. A., & Nelson, J. A. (2003). Feminist economics today: Beyond economic man. University of Chicago Press.
Garikipati, S., Boudot, C., & Roesch, M. (2017). Empowering women through microfinance: Evidence from India. Journal of Development Studies, 53(5), 684–699. https://doi.org/10.1080/00220388.2016.1205734
Goetz, A. M., & Gupta, R. S. (1996). Who takes the credit? Gender, power, and control over loan use in rural credit programs in Bangladesh. World Development, 24(1), 45–63. https://doi.org/10.1016/0305-750X(95)00124-U
Hashemi, S. M., Schuler, S. R., & Riley, A. P. (1996). Rural credit programs and women’s empowerment in Bangladesh. World Development, 24(4), 635–653. https://doi.org/10.1016/0305-750X(95)00159-A
Jamaluddeen, and Serene Alam. (2022). The Impact of microfinance on poverty reduction through women’s empowerment. Sachetas, 1(4), 21-31. https://doi.org/:10.55955/140002.
Johnson, S. (2005). Gender relations, empowerment and microcredit: Moving forward from a lost decade. The European Journal of Development Research, 17(2), 224–248. https://doi.org/10.1080/09578810500130776
Kabeer, N. (1999). Resources, agency, achievements: Reflections on the measurement of women’s empowerment. Development and Change, 30(3), 435–464. https://doi.org/10.1111/1467-7660.00125
Kabeer, N. (1999). Resources, agency, achievements: Reflections on the measurement of women’s empowerment. Development and Change, 30(3), 435–464. https://doi.org/10.1111/1467-7660.00125
Kabeer, N. (2001). Conflicts over credit: Re-evaluating the empowerment potential of loans to women in Kabeer, N. (2003). Gender mainstreaming in poverty eradication and the Millennium Development Goals. Commonwealth Secretariat.
Kabeer, N. (2005). Gender equality and women’s empowerment: A critical analysis of the third Millennium Development Goal. Gender & Development, 13(1), 13–24. https://doi.org/10.1080/13552070512331332273
Kabeer, N. (2010). Women’s empowerment, development interventions and the management of information flows. IDS Bulletin, 41(6), 105–113. https://doi.org/10.1111/j.1759-5436.2010.00188.x
Karlan, D., & Zinman, J. (2011). Microcredit in theory and practice: Using randomized credit scoring for impact evaluation. Science, 332(6035), 1278–1284. https://doi.org/10.1126/science.1200138
Khan, R. E. A., & Bibi, S. (2011). Microfinance and women empowerment: A case study of District Bahawalpur (Pakistan). African Journal of Business Management, 5(11), 4091–4097.
Knowles, J. C., & Luke, N. (2018). Microfinance and women’s empowerment: Evidence from India. World Development, 112, 1–14. https://doi.org/10.1016/j.worlddev.2018.07.005
Kumar, S., & Divya, S. (2021). Microfinance and women’s empowerment: A global perspective. Journal of Social Economics, 48(2), 200–215.
Leach, F., & Sitaram, S. (2002). Microfinance and women’s empowerment: A lesson from India. Development in Practice, 12(5), 575–588. https://doi.org/10.1080/0961452022000016071
Ledgerwood, J. (1999). Microfinance handbook: An institutional and financial perspective. World Bank.
Mahmood, S. (2011). Microfinance and women’s empowerment in Bangladesh: A review of the evidence. Journal of Development Studies, 47(12), 1789–1807. https://doi.org/10.1080/00220388.2010.492863
Manjoor, A., & Mander, H. (2009). Women and microfinance: Lessons from the field. Sage Publications.
Mayoux, L. (2000). Micro-finance and the empowerment of women: A review of the key issues. International Labour Organization. https://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_117993.pdf
Mayoux, L. (2001). Tackling the down side: Social capital, women’s empowerment and micro-finance in Cameroon. Development and Change, 32(3), 435–464. https://doi.org/10.1111/1467-7660.00212
Morduch, J. (1999). The microfinance promise. Journal of Economic Literature, 37(4), 1569–1614. https://doi.org/10.1257/jel.37.4.1569
Morduch, J. (2000). The microfinance schism. World Development, 28(4), 617–629. https://doi.org/10.1016/S0305-750X(99)00151-5
Morduch, J., & Haley, B. (2002). Analysis of the effects of microfinance on poverty reduction (NYU Wagner Working Paper).
Muhammad, A., Alam, M. M., & Mian, I. (2012). Impact of microfinance on women empowerment: An empirical evidence from rural Pakistan. International Journal of Academic Research in Business and Social Sciences, 2(5), 98–117.
NABARD. (2008). Status of microfinance in India 2007–08. National Bank for Agriculture and Rural Development. https://www.nabard.org
Nawaz, S. (2010). Microfinance and poverty reduction: Evidence from Pakistan. Pakistan Development Review, 49(4), 791–807.
Nawaz, S. (2015). Microfinance and women’s empowerment: A macro perspective. World Development, 66, 1–10. https://doi.org/10.1016/j.worlddev.2014.08.005
Panigraphy, R., & Bhuyan, D. (2006). Women’s empowerment through microfinance: A case study of Orissa. Economic and Political Weekly, 41(17), 1691–1697.
Pitt, M. M., & Khandker, S. R. (1998). The impact of group-based credit programs on poor households in Bangladesh: Does the gender of participants matter? Journal of Political Economy, 106(5), 958–996. https://doi.org/10.1086/250037
Pitt, M. M., Khandker, S. R., & Cartwright, J. (2006). Empowering women with microfinance: Evidence from Bangladesh. Economic Development and Cultural Change, 54(4), 791–831. https://doi.org/10.1086/503580
Putnam, R. D. (2000). Bowling alone: The collapse and revival of American community. Simon & Schuster.
Rahman, A. (2019). The dark side of microfinance: Over-indebtedness and exploitation in Bangladesh. Journal of Peasant Studies, 46(4), 793–816. https://doi.org/10.1080/03066150.2018.1552266
Rehman, H. (2007). Microfinance and women’s empowerment: A case study of rural India. Journal of International Women’s Studies, 8(4), 1–15.
Sen, A. (1997). Editorial: Human capital and human capability. World Development, 25(12), 1959–1961. https://doi.org/10.1016/S0305-750X(97)10014-0
Shankar, S. (2013). Microfinance and women’s empowerment: Evidence from South Asia. World Development, 42, 165–177. https://doi.org/10.1016/j.worlddev.2012.06.004
Sharma, M., & Nepal, R. (2021). Microfinance and poverty reduction in Nepal: A gendered perspective. Journal of Development Studies, 57(2), 234–250. https://doi.org/10.1080/00220388.2020.1806242
Solomon, B. (2021). Global poverty and gender inequality: Trends and challenges. Palgrave Macmillan.
Swain, R. B., & Wallentin, F. Y. (2009). Does microfinance empower women? Evidence from self‐help groups in India. International Review of Applied Economics, 23(5), 541–556. https://doi.org/10.1080/02692170903007540
United Nations. (2018). Principles for responsible microfinance. United Nations Capital Development Fund (UNCDF). https://www.uncdf.org
Vallabh, P., & Chatrath, A. (2006). Microfinance and women’s empowerment: A study of SHG-bank linkage program in India. Journal of Microfinance, 8(1), 45–70.
Yunus, M. (2007). Creating a world without poverty: Social business and the future of capitalism. PublicAffairs.
Published
2025-04-30
Issue
Section
Articles
How to Cite
Chand, P. B. (2025). The Impact of microfinance on poverty reduction through women’s empowerment. Quantitative Economics and Management Studies, 6(2), 188-197. https://doi.org/10.35877/454RI.qems3864
Copyright (c) 2025 Prakash Bahadur Chand
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
