Microfinance and Women's Empowerment: Evidence from the Self Help Group Bank Linkage Programme in India

Examining the sufficiency of microfinance as a tool to empower women
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This paper investigates the impact of microfinance on women’s empowerment. It uses evidence from a multi-level survey of the self-help group (SHG) bank linkage program in India.

The paper defines empowerment of women as the process in which women challenge existing norms and culture to effectively improve their well-being. It makes a distinction between outcomes that lead to greater efficiency within existing norms, community-driven development, and outcomes that can be directly interpreted as women’s empowerment. Findings include:

  • Microfinance has a definite economic impact on households, with increases in income and decline in vulnerability;
  • There is significant impact on SHG households in terms of control, management ability, self-confidence, change in behaviour, decision-making, and participation in local politics;
  • Microfinance does not impact certain key decisions, such as using family planning or buying and selling of land, which would be true evidence of women’s empowerment.

The paper concludes that microfinance acts as a catalyst to women’s empowerment, but does not empower women by itself. It needs to be supplemented with non-financial services like training, awareness creation programs, and education to be able to effectively empower women.

About this Publication

By Swain, R.B.