Women have long been considered key partners for successful Microfinance loans. They have proven accounts for lower default rates than men. Also Microfinance allows to integrate women in entrepreneurial activities in regions that previously had seen them excluded from any business related activities.

Ever since the emergence of Microfinance, its relationship to the empowerment of women in developing countries has been extensively discussed. In many poor rural areas that see active MFIs, women had been traditionally excluded from participating in entrepreneurial activities. However, programs offered specifically at women have systematically begun breaking down these barriers.

It is usually women who have a better overview on the household spending and are more used to organize the family expenditures. Additionally, there is a higher tendency for men not to use the money for the claimed entrepreneurial activities, but rather spending the loans on alcohol or on gambling related activities. [1]

The active targeting of women with microcredit programs or related schemes had a beneficial effect not only for women. While they can better provide for their families and enjoy a higher social standing – on the other side they boast higher retention rates at their MFIs and repay their loans more dependably. It should come as no surprise that in a 2013 study, 74% of MFIs claimed to target women in particular and more than half of them saw women’s empowerment or gender equality as one of their goals [2].

Yet it is very important not to view such positive cases and successful effects as a nice-to-have add-on. Much rather, as highlighted in a study focusing on the situation in rural Vietnam, gender equality and the empowerment of women should be integrated guiding paradigms when designing new Microfinance products [3].

Another study goes even further and looks not only at the target groups for credits, but also the equality of the employers and credit agents. The paper provides evidence that MFIs can achieve lower default rates by ensuring gender-diverse boards and employing female loan officers [4].

As a result it should be pointed out that while much has already been achieved in Microfinance in general, it is especially pleasing to highlight the positive impact that has been generated by and for many women around the globe. It goes to say that men should not be excluded through gender differentiated targeting, but a smart design of Microfinance should take into account gender specific aspects when giving out loans.





[3] Dineen, Katherine, and Le, Quan V., The Impact Of An Integrated Microcredit Program On The Empowerment Of Women And Gender Equality In Rural Vietnam, in: The Journal of Developing Areas, Vol. 49, No. 1, Winter 2015.

[4] Hartarska, Valentina, Nadolnyak, Denis, and Mersland, Roy, Are Women Better Bankers to the Poor? Evidence from Rural Microfinance Institutions, in: American Journal of Agricultural Economics, 96(5): 1291–1306, August 2014.

Microfinance and Gender Equality

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