Creating women’s capabilities through microcredit in Bangladesh

Abstract

Group-based microcredit, an extension of small amounts of collateral-free institutional loans to poor with limited access to formal credit markets, has become one of the most popular development strategies in Bangladesh. The underlying logic behind the group lending model is that the provision of small loans for poor women, in particular, could facilitate socio-economic development and livelihood improvement in the rural areas. Microcredit to women is considered as a tool for empowering women with increased self-esteem, decision-making capability and new income-earning opportunities. However, the impact of microcredit on marginalized people remains debated. While the positive impact of microcredit on millions of poor people’s lives has been documented by various studies, there are also studies that challenge the arguments about women empowerment through microcredit involvement. Based on interviews with 175 of economically and socially vulnerable female microcredit borrowers, the present study contributes to the continuing debate over how or if microcredit intervention enhances women’s capabilities in achieving health care utilization, food and nutrition security, and personal freedom at the local level in Bangladesh. Indices were developed to quantify the capabilities of women. To measure different aspects of capabilities, variables were analyzed through uni-variate and bi-variate analyses. The results of the present study confirm that microcredit involvement improves women’s basic capabilities but it is not as significant as attested by earlier studies.