Micro-finance and empowerment of women: Evidence from Nepal

Abstract

During the last two decades micro-finance programs have proliferated around the world. The Nobel Peace Prize 2006 awarded to the Grameen Bank and its founder signifies the global recognition of micro-finance as an effective strategy for poverty alleviation and socio-economic development. Micro-finance programs are also acknowledged for having an empowering effect on women. Previous studies, however, have shown contradictory results on the empowering effect of micro-finance programs. Some studies have shown that micro-finance empowers women while other studies indicate that micro-finance not only increase gender conflict and subordination of women, but also result in the loss of women's control over their loans. This study examines the empowerment of low-income Nepalese women from squatter communities who participate in micro-finance programs. A significant difference in the level of self-esteem, self-efficacy and contribution to family income between participant group and non-participant group was found. In addition, a significant correlation between the level of self-esteem and self-efficacy and the amount of time the subjects participated in micro-finance programs meant that participation in micro-finance might have enhanced these factors. Regression analyses showed that participation in micro-finance programs had significant positive effects on self-esteem, self-efficacy and contribution to family income while controlling for socio-demographic variables like age, education level, family size and family income. This study concluded that micro-finance could help to empower female participants.