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Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.4, No.5, 2014
90
The Role of Microcredit Program on Women Empowerment:
Empirical Evidence from Rural Bangladesh
Md. Shahidul Islam (Corresponding author)
MSS (Thesis), Department of Sociology,Shahjalal University of Science and Technology
Sylhet,Bangladesh
Tel: +88-01722-918936 E-mail: shahidulsoc@gmail.com
Md. Faysal Ahmed
MSS (Thesis), Department of Political Studies,Shahjalal University of Science and Technology,
Sylhet,Bangladesh
Tel: +88-01727-990671 E-mail: faysal.pss@gmail.com
Muhammad Shafiul Alam
MSS, Department of Public Administration, Shahjalal University of Science and Technology (SUST), Sylhet,
Bangladesh
Tel: +88-01732-411000 E-mail: shafiul.mohon@gmail.com
Abstract:
The empowerment of women is the burning issues in developing countries. This study examined the impact of
micro-credit on the empowerment of rural women in Bangladesh. A total of 120 respondents were selected as
sample using stratified random sampling technique on Tuker bazar Union Parishad under Sylhet Sadar Upazilla
in Sylhet district, Bangladesh and data was collected through face to face interview by using survey method. The
women empowerment was measured by five dimensions .These dimension were (1) economic decision making,
(2) household decision making,(3) freedom of physical movement, (4) ownership of property,(5) political and
social awareness. OLS (Ordinary Least Squares) regression was applied to understand the effects of microcredit
program on each dimension of women empowerment and aggregate women empowerment. The results showed
that microcredit program was positively associated with each dimension of women empowerment as well as
aggregate measure of Empowerment. So, this study reveals that microcredit program improves the women
empowerment in Bangladesh.
Keywords: Microcredit, Empowerment, Effects, Rural Women, Bangladesh.
1.Introduction
In modern period, small loan, in its spread scope known as microfinance or micro credit, has become a much
favored element for poverty reduction in the developing countries and least development countries (Ahmed,
2004). Bangladesh has 160 million populations, that’s why it called one of the largest density countries in the
world. However, a lot of amount of this population is still live in the very poor level (Zoynul & Fahmida, 2013).
As a goal in itself as means the women empowerment are very much important to achieve greater gender
equality. There are another goal of the women's empowerment is that it will also be a process to remove the
poverty in the society (Volart, 2004; Mayoux, 2000). However, microcredit almost target women and it is an
important tool to empower women from poor household level (Noreen, 2011). Employment women always play
a vital role to enhance the national income of the state and manage a sustainable existence of the societies,
families and communities, throughout the world. In recently, women although become develops but they run
livelihood by many socio- cultural restrictions, such as gender discrimination, family violence, social and
religious prejudice, legal barriers, lack of education etc. From the primitive society, women have been
marginalized. They are rarely independent by the financial condition and decision making process and often they
face more vulnerable problems of society (Zoynul & Fahmida, 2013). About 70% of world’s poor are women
(Noreen, 2011). In Bangladesh most of the female live in marginal areas, where majority of them engaged in
many activities like that management of crops, livestock, fisheries, biological diversity, energy and family
(domestic chores as cleaning, cooking, childcare, fetching water and so on). Even the substantial economic
contribution of them is largely unacknowledged (Sultana & Hasan, 2010). Women’s have a few accesses to
trades, industrial institution, educational services, health care and politics leads to a lower wellbeing of the
family that retards the progressive goals of the country and shock women (Parveen and Chaudhury, 2009).
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Micro-credit has move toward a long way since its start by Professor Yunus, Managing Director of Grameen
Bank, in 1974 in Jobra, a village in Chittagong of Bangladesh. The strength of micro-credit lies in its capability
to systematize inactive women into a productive workforce with their proven creditworthiness (Chavan and
Ramakumar, 2002). He was awarded the 2006 Nobel Peace prize for his contribution in this level. Before
Grameen Bank, a lot of governmental and nongovernmental organizations sponsored subsidized credit programs
in Bangladesh, such as Bangladesh Krishi (agriculture) Bank (BKB), and other institutions were not successful
in accomplishment the poor, more specifically deprived women due to high transaction costs to supply loans to
the poor and collateral-based conventional banking system (Islam and Mizanur, 2013). It is assumed that 25
million populace worldwide are now using micro-credit to undertake income-generating or self-employment
activities; of these, 90% are women (Chavan and Ramakumar, 2003). The 1997 Microcredit Summit held in
Washington D.C., launched a global movement to reach 100 million of the world's poorest families with credit
for self-service and other financial and business services by the year 2005. According to the Microcredit Summit
Campaign Report, 67.6 million families have been reached by microcredit in 2002 around the world (Ahmed,
2004). Out of that 59.6 million clients are in Asia and Bangladesh alone covered 13 million clients (22.6%). The
total coverage of Microcredit programs in Bangladesh is approximately 13 million households (Ahmed, 2004).
According to 2001 Census in Bangladesh 23.39% people lives in urban and 76.61% in rural from the total
population (Islam, 2003). Although Bangladesh has huge feasibility for advancement, it is, for a variety of socio-
economic reasons, among the poorest countries in the world. About half of the country's population lives below
the poverty line with 80% in the rural areas (Ahmed, 2004). The burden of poverty sprays disproportionately on
women, who represent half of the entire population. Logically, therefore, poverty alleviation and creation of
countryside employment are pinnacle priorities in the enlargement program of the government of Bangladesh
which has adopted an extensive based approach to poverty reduction, emphasizing macroeconomic constancy,
economic liberalization, and support for a number of government agencies and non-government organizations
(Ahmed, 2004).
In recent time, argues are going on whether contribution in micro-finance programs empowers or disempowers
women (Kabeer, 2001). There are basically two wide and divergent evidences about the micro-credit’s impact on
women’s empowerment in Bangladesh. One group of scholars (Rahman, 1999; Mizan, 1994; Kabeer, 2001) is
hopeful about sustainable micro-finance programs, and the possibility of women’s empowerment through micro-
credit programs. They argue that credit programs empower women by increasing their income, enabling them to
contribute to their families, and strengthening their social networks. On the other hand, another group of scholars
(Goetz, 1996; Rahman, 1999; Hunt and Kasynathan, 2001) are pessimistic about micro-credit’s impact on
women’s empowerment. They argue that instead of empowering women, micro-credit leads to greater
subordination of women and make them more vulnerable in patriarchal rural society.
Certainly, it can say that in Bangladesh like all third world countries women’s access to positions power is too
limited. They are dependent on the men by socially, politically, familiarly & economical. Especially rural
women are lower level than the urban area and they must struggle to remove the discrimination & reconcile
activities outside the home with their traditional roles. For these reason women empowerment is so important in
Bangladesh. Micro finance play a vital role for women development and help them in the aspects of decision
making process in the personal, family, social, economic, administrative and even in national sector.
In Bangladesh we find a lot of literature about various roles of micro finance programs, but only a few
researches have focused specifically on micro-credit’s role on women’s empowerment. So, this study aimed to
understand the effect of micro-credit on the empowerment of rural women in Bangladesh
1.1 Literature review
Sarumathi & Mohon (2011) had analyzed about the micro credit impacts on women empowerment. They found
that micro finance was one of the essential elements to remove the poverty and the improvement of rural women
capacity. They also discussed the empowerment of the women sensitively, financially and in a social context.
Their investigation showed that there was a continuing enlarge in the all the three factors among rural women’s.
There is a distinct enhancement in mental welfare and public empowerment among rural women consequently
participating in micro finance. Camille (2011) found the bottomless relationship between the micro finance and
women empowerment, whereas it risen up women empowerment rapidly. He showed the increasing of female
development in the aspects of increasing the economical resources. The research’s findings specified that
microfinance had positively and negatively impacted a range of scope of the women have apparent
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empowerment. Parveen & Chaudhury (2009) was intended to analyzed countryside women’s financial
empowerment as the outcome of micro-credit interventions. Basically women improvement has dependent on
three economical elements such as: income, savings and asset. By the use of those resources women
enhancements like; to remove gender discrimination, poverty reduction, family power exercise and self-reliance
has increased day by day. Noreen (2011) explored the positive impacts of micro finance on the enlargement of
women empowerment. She analyzed women empowerment by using five indicators related to child health,
education, selection of spouse of children, purchase of basic goods and decision. In this study, She recommended
that educational services, family consciousness, strengthen of governmental and nongovernmental institutions
and their cooperation had essential to develop the women empowerment. Nessa et al. (2012) discussed the
different aspects of micro credit. They analyzed that micro finance not only improve the earnings sources of
rural and poor women but also it enhanced better abilities, choices and self-determination in decision making.
There were five dimensions in decision making, such as; household, economic, movement, property, political
and social. They found that every dimension had significantly increased due to micro finance effects. Garikipati
(2010) studied the empowering of women in the family level. Although the loans are benefits for the household
but it’s not absolutely influences to the women empowerment. Particularly, female whose loans are invested in
domestic property can discover the process disempowering. This is due of women not have co-ownership in
household’s creative assets. Where loan diversion by households cannot be restricted women’s joint rights of
Household assets come out as fundamental to their empowerment. Loro (2013) evaluated his research study
about the gender discrimination in the third world countries. He showed that the rank and supremacy of women
had enhanced significantly from the time when NGO opened their activities in developing nations. However,
micro finance loans have increased self-esteem and self-respect of women and thereby empowered them. In spite
of, credits often economically beneficiary as well as it enhances the higher social status of women. Pitt et al.
(2006) said that, credit provided women had statistically significant effects and it’s showed the way of women
taking a better position in household decision making, having greater access to financial and economic resources,
having greater social networks, having greater bargaining power vis-a`-vis their husbands, and having greater
freedom of mobility. They also analyzed that women’s involvement in small loans programs had an encouraging
consequence on fertility.
1.3 Women empowerment
In developing countries women are discriminated by socially, economically and politically. Sometimes their
positions have seen lower level in family or household activities. In generally, empowerment is refers as the
processes by which women take control and ownership of their lives through expansion of their choices (Kabeer,
2001). Whenever women get freedom to lead their life and assets it’s called women empowerment. Baltiwala
(1995) defines empowerment as control over material assets, economic resources and ideology. Bennett (2002)
described empowerment as “the enhancement of assets and capabilities of diverse individuals and groups to
engage, influence and hold accountable the institutions which affect them.”Mbwewe and Keller (1991) described
women empowerment as “a process whereby women become able to organize themselves to increase their own
self-reliance, to assert their independent right to make choices and to control resources which will assist in
challenging and eliminating their own subordination”. The empowerment of women is also called an important
precondition for the mitigation of poverty and the maintenance of human rights and basic needs, in particular at
the individual level, as it helps to construct a base for social mobility (DFID, 2006).
Women empowerment generally used for improving women’s condition, in real sense it may be applied to any
underprivileged part of society for bringing them to the same level of advanced section. In simple sense,
empowerment is a process which redistributes power from the powerful to the powerless. In the context of
Bangladesh, empowerment of women means women should be given freedom of choice for fulfillment and self-
development, as well as equal access to domestic and community resources, opportunities and power (Kumar et
al., 2013). There are two measurements to realize the women empowerment. The first is social mobilization and
collective agency, as poor women hardly have the essential capabilities and self-assurance to counter and
challenge existing disparities and barriers against them. Often, modify agents are needed to catalyze social
mobilization consciously. Second, the process of social mobilization needs to be accompanied and
complemented by economic security. As long as the disadvantaged suffer from economic deprivation and
livelihood insecurity, they will not be in a position to mobilize (UNDP, 2001). Almost all definitions of women
empowerment include some reference to an expansion of choices and freedom to make decision and take action
necessary to shape life outcomes (Malhotra and Schular, 2005). Finally, it can easily say that women
empowerment define as a human being if female achieved fundamental & basic rights such as: food, shelter,
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medicine, education, entertainment; to develop financial strengths, to involve decision making activities (from
family to state stages) and remove all violence and discrimination over them .
2. Data and methods: The primary data was collected a survey conducted at Tuker bazar Union Parishad under
Sylhet sadar upazilla in Sylhet district, Bangladesh. The survey was conducted in January 2014.
Ward no. 3 was purposively selected for the study area .This ward was selected because most of the women
were involved in microcredit programmes. Total 120 respondents were selected by using stratified random
sampling method. Among the total sample, 60 respondents were involved in any microcredit scheme. These
respondents were selected randomly from the available list of the microcredit offices (BRAC, Gramen Bank,
ASA). The other, 60 respondents were also selected randomly from this area who are not involve in any
microcredit scheme. Both of the two groups had a similar socio-economic status. Data were collected by face to
face interview through a semi-structure questionnaire.
The SPSS (Statistical package for social science) 20 programs was used to analyze the data. At first the data
were presented as percentage, mean, standard deviation .Next, OLS (Ordinary Least Squares) technique was
applied to measure the effects of microcredit on women empowerment.
2.1Variables of the study
The independent variables of the study were involved in microfinance institution (MFI), age, years of schooling
and annual income. The women empowerment was the dependent variable. The women empowerment was
measured by five dimensions. These dimension were (1) Economic decision making, (2) Household decision
making, (3) Freedom of physical movement, (4) Ownership of property, (5) Political and social awareness.
These dimensions were derived from various previous literatures (Haque et al., 2011; Nessa et al., 2012). Each
item of the dimension were measured by 5 point range. Then, the each dimension of empowerment score was
measured adding the scores obtained in all items in that class (Nessa et al, 2012).The aggregate index of
empowerment was measured by adding all five dimensions score and then have divided by the total number of
item (Nessa et al, 2012).
3. Results
The summary statistics shows the women empowerment dimensions and other socio-economic factors (table
1).The minimum score of economic decision making empowerment was 1.48, household decision making
empowerment was 1.20, freedom of movement empowerment was 1.50, ownership of property empowerment
was 1.16, political and social awareness empowerment was 2.10, aggregate women empowerment was 1.60, age
was 20 year, years of schooling is 0 and annual income was 1000 Taka. The maximum score of economic
decision making empowerment was 4.80, household decision making empowerment was 4.75, freedom of
movement empowerment was 4.20, ownership of property empowerment was 4.10, political and social
awareness empowerment was 4.63, aggregate women empowerment was 60, age was 4.61 year, years of
schooling was 18, annual income was 40,000 Taka.
The table 1 shows the mean score of the women empowerment dimensions and other socio-economic factors
.The mean score of economic decision making empowerment was 2.935, household decision making
empowerment was 3.022, freedom of movement empowerment was 2.370, ownership of property empowerment
was 2.555, political & social awareness empowerment is 2.7268, Aggregate social capital index was 2.951, age
was 27.62, years of schooling was 7.66 and annual income was 1200.60 Taka.
The table 2 shows the results that the factors related to empowerment dimension as well as total empowerment.
The coefficient of economic decision making empowerment was 0.989.This indicates that for each unit increase
MFI, economic decision making empowerment increases by 0.989 units. The coefficient of household decision
making empowerment was 0.769. This indicates that for each unit increase MFI, household decision making
empowerment increases by 0.769 units. The coefficient of freedom of movement empowerment was 0.892. This
indicates that for each unit increase MFI, Freedom of movement empowerment making empowerment increases
by 0.892 units. The coefficient of ownership of property empowerment was 0.889. This indicates that for each
unit increase MFI, ownership of property empowerment making empowerment increases by 0.889 units. The
coefficient of political and social awareness empowerment was 0.678. This indicates that for each unit increase
MFI, political & social awareness empowerment making empowerment increases by 0.889 units. The coefficient
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of total empowerment index was 0.829. This indicates that for each unit increase MFI, Aggregate empowerment
increases by 0.829 units. The coefficient of annual income on economic decision making was 2.25.This indicates
that for each unit increase annual income, economic decision making empowerment increases by 2.25 units.
The coefficient of annual income on household decision making was 1.20. This indicates that for each unit
increase annual income, household decision making empowerment increases by 1.20 units. The coefficient of
annual income on freedom of movement was 0.896. This indicates that for each unit increase annual income,
freedom of movement empowerment increases by 0.896 units. The coefficient of annual income on political and
social is 0.025. This indicates that for each unit increase annual income, political and social awareness
empowerment increases by 3.33 units. The coefficient of annual income of aggregate empowerment was 2.22.
This indicates that for each unit increase annual income, aggregate empowerment increases by 2.22 units.
Among the background characteristics, the table shows that coefficient of women age also positive of all women
empowerment dimensions and total women empowerment .The result shows the each unit increases the years of
schooling, economic, decision making and household decision making empowerment decreases by 0.042 and
0.031 units but the reverse result found in aggregate women empowerment, each unit increases the years of
schooling, aggregate empowerment increases by 0.011 units.
4. Discussion:
This study tries to examine the effect of microcredit on women empowerment. This study reveals that
microcredit programs enhance the women empowerment in rural area of Bangladesh. The microcredit
participants are more capable of taking their economic and household decision making (Pitt et al., 2006). Women
age is important for women empowerment. Evidence supported that women age had positive effect of women
empowerment in Bangladesh (Haque et al., 2011). Older women have more empowerment compare to younger
women because older women have more experience with life and better understanding about their demand
(Noreen, 2011). So, women empowerment increases as the age of the women increases. We found that women
education was positively associated with women empowerment but negative association was found with
economic decision making, household decision making and ownership of property .This study shows that annual
income is most important to all dimensions of women empowerment as well as overall empowerment too.
Women who have involved in income generation activities may lead to higher empowerments that are not
involving any income generation activities (Nessa et al, 2012). Microcredit is an important strategy in
empowering income for poor women (Sultana & Hasan, 2010)
Evidence supported that economic empowerment of women could be enhanced through their income generation
activities (Parveen & Chaudhury, 2009). Evidence supports that women participating in group saving and credit
programs help to rural women start small-scale income generation activities (Acharya et al., 2007). Microcredit
enables the women managing during crisis, creates new earning source, build assets and improve the social and
economic status of the women (Hashemi et al., 1996). Economic condition is an important factor of
empowerment of people (Sultana & Hasan, 2010). So, it generally understands, involving in microcredit
program, increase the economic status of the women compare to non participants in microcredit program. So,
microcredit participation’s women are more empowered than non involvement in microcredit program due to
their better economic status. Our study reveals that involvement in microcredit programs increases the political
and social awareness of the women. Evidence supports that participation in MFI increases the probability that a
woman knows the name of the Member of Parliament in her area, increases the probability that a women voted
in last election independently (Pitt et al., 2006). Involvement in microcredit program not only enhances the
ability of make decisions in various project activities but also enhances the ability in household decision making
process (Zoinal & Famida, 2012). Women participating in microcredit programs creates social capital or trust
that enhances the political empowerment (Denham,...). This political empowerment of women is useful for
removing bad situation and problems (Denham,..)..Microcredit promotes the women self confidences and
prosper their skill and self worthiness (Sarumathi and Mohan, 2011).The study reveals that microcredit programs
enhance the household decision making empowerment. A study conducted in Bangladesh by Khan et al. (2013)
found that microcredit involvement women were more likely to exercise on various household decision making
process freely including fertility related issue as when to take child and what types contraceptive method was
used to stop child bearing compared to non participants in microcredit programs (Khan et al, 2013). Evidence
supported that microcredit participants women were more able to in decision making regarding conjugal life,
loan taking, spending money received from micro credit, interest in politics, voting behavior and Purchase or
sale of materials (Khan et al, 2013).
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4. Conclusion: This study shows that MFI is positively related to economic decision making empowerment,
household decision making empowerment, freedom of movement empowerment, ownership of property
empowerment, political and social awareness and overall empowerment. So, participations in microcredit group
increase the women empowerment. This study also reveals that women age also positively associated with of all
women empowerment dimensions and total women empowerment. This study reveals that women’s income
have strong positive effects on all dimensions of women empowerment and overall women empowerment too.
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Table 1. Summary statistics of the variables
Variable Minimum Maximum Mean Standard Deviation
Economic decision making empowerment 1.48 4.80 2.935 0.737
Household decision making empowerment 1.20 4.75 3.022 0.7403
Freedom of movement empowerment 1.50 4.20 2.370 0.574
Ownership of property empowerment 1.16 4.10 2.555 0.728
Political & social awareness empowerment 2.10 4.63 2.7268 0.8161
Aggregate women empowerment 1.60 4.61 2.951 0.696
Age (years) 20 55 34.012 8.825
Years of schooling 0 18 7.590 5.096
Microfinance institution (MFI) 0 1
Income(annual) Taka 1000 40000 11333.333 12297.80285
Table 2. The regression coefficient showed the effects of participation in MFI on empowerment
Independent
variables Economic
decision
making
Household
decision
making
Freedom
of
movement
Ownership
of
property
Political
&
social
awareness
Aggregate
empowerment
Constant 0.989* 0.769* 0.892* 0.889* 0.678* 0.829**
MFI
1
0.849*** 0.652** 0.667** 0.522* 0.379*** 0.679***
Age 0.122* 0.116* 0.152* 0.101* 0.133* 0.112*
Education -0.042** -0.031* 0.021 -0.011 0.021 0.011***
Annual income 2.25*** 1.20* .896* .025* 3.33* 2.22***
R square 0.898 0.789 0.786 0.689 0.886 0.796
Significant at ***p<0.01;* *p<0.05; p<0.10
1
Involvement with MFI (Dummy variable: 0=MFI non-member, 1=MFI member)
Total 120 respondents
