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Gender and Microfinance
Lecture # 8
Week 2
Reaching Women
Why Women?
Evaluating Impact
Can one re-define gender empowerment?
Structure of this class
Reaching Women 10.3 million in 1999 69 million in 2005 570% increase 84.2% of total clients Quote-Rutherford (POP) SaveSafe
Source: Daley-Harris, Sam (2006). “State of the Microcredit Summit Campaign Report 2006”.
Women Served
Source: Daley-Harris, Sam (2006). “State of the Microcredit Summit Campaign Report 2006”.
Why Women? Women make up a large and growing
segment of the informal-sector Women tend to be more credit constrained Commercial banks focus on men because
men form a larger portion of the formal sector
Women’s share of the informal sector in the non-
agricultural labor force, 1991/1997
Women’s share of the informal sector in the non-
agricultural labor force, 1991/1997Women Men
AfricaBeninChadGuineaKenyaMaliSouth AfricaTunisia
97978483963039
83596159911452
62533760596118
Latin AmericaBoliviaBrazilChileColombiaCosta RicaEl SalvadorHondurasMexicoPanamaVenezuela
74674444486965554147
55553142464751443547
51474650405856444438
AsiaIndiaIndonesiaPhilippinesThailand
91886454
70696649
23434647
Source: The United Nations, 2000. The World’s Women 2000: Trends and Statistics. Chart 5.13, p. 122
Why Women? Financial Impact MFI’s standpoint
Development Impact Donors’ standpoint Empowerment Impact
Financial Impact: Targeting women customers creates financially sustainable institutions
Financial Impact Women are better customers
Higher repayment rates Conservative in investment strategy – more risk
averse More vulnerable to peer pressure and threat of public
humiliation Less access to credit which reduces risk of moral
hazard Hossain (1988): 81% of women had no repayment
problems versus 74% of men. Khandker et al., (1995): 15.3 % of male borrowers were
“struggling” in 1991 versus 1.4% of female (missing some payments before the final due date)
Financial Impact Women are better customers
Less mobile Reduces monitoring costs – for bank as well as peer
monitoring Enables women to attend repayment meetings (if
applicable) Less argumentative
Lower staff costs Institutions can hire more female staff
Development Impact: Targeting women has a greater impact on social and economic
development
Development Impact Women are poorer
UNDP Human Development Report (1996): 70% of the world’s poor, about 900 million women
Women spend on household consumption as opposed to personal consumption Pitt and Khandker (1998): Empirical studies have
shown that women are more likely than men to direct additional income to household consumption
Working women contribute to economic growth
Development Impact Women are more concerned about children’s
health and education Pitt et al., (2003): Credit provided to women improves
measures of health and nutrition for both boys and girls, while credit provided to men has no significant effect.
Women’s businesses experience higher returns to capital because of lower starting point
Empowerment Impact: Targeting women reduces gender inequity and empowers
women by increasing their decision-making power
Empowerment Impact Increases women’s decision-making power
Pitt et al., (2006): Women’s participation in credit programs leads to women having greater role in household decisions, social networks, and greater freedom of mobility. Increase spousal communication about family planning and parenting concerns.
Improvement in domestic interactions Third party scrutiny of household abuse Intervention with Microfinance for AIDS and Gender
Equity (IMAGE) study demonstrated reductions in levels of intimate-partner violence in participants.
Evaluating Finance, Development and Empowerment Impact
Evaluating Financial Impact As MFI’s scale, the % of women clients
decrease Small scale – 75.3% women borrowers Medium scale – 64.5% women borrowers Large scale – 55.2% women borrowers
For-Profit institutions tend to serve fewer women clients Not for Profit – 71.9% women borrowers For Profit – 54.5% women borrowers
Evaluating Financial Impact Women receive smaller loans and hence
lower returns on investment Negative correlation between Percent of Women
Borrowers and Average Loan Balance Per Borrower
Source: MicroBanking Bulletin, Issue No. 12, April 2006
Evaluating Development Impact Women do not control all loans
Goetz and Sen Gupta (1996): 40% of women have little or no control over their loans
Difficulty in scaling businesses due to limited resources (including skills and experience)
Difficulty in scaling businesses due to greater risk and debt aversion
Evaluating Development Impact Income generation responsibility may
lead to heavier workload and more stress Mayoux (1999): Lack of substitute care for
children and elderly leads to added pressure
Evaluating Empowerment Impact Pressure to pay back loans can lead to
domestic pressure and violence Contrary to the IMAGE study, per
Rahman’s study 70% of women expressed increase in violence (based on one village)
Limited empowerment outside the household Mayoux (1999): Less evidence of socio-
political empowerment due to presence of inflexible social norms and traditions
Evidence (Asia and Africa) on married women
Limited control over investment decisions and returns
Heavier work load and increased stress
Increased incidence of violence by men against their entrepreneurial wives
Anecdotal Evidence From Southern Mexico Informational asymmetries
Externalities
Insecure “hiding places”
“Mixed” groups more attractive to women
Higher repayment rates
In Line With Widespread Concerns“…male exclusion can lead to negative consequences for
women who join financial services: they may meet resistance from men who see their exclusive participation as unfair and threatening; their loans may be hijacked…A family whose adult members all have access to financial services is better off than one where half are ineligible.”
Hugh Allen at the Microfinance Forum 2006
Impact Evaluation (Joint work with Innovation for Poverty Action Researchers)
Field experiment in Southern Mexico
Objective: By inviting husbands as clients, will they more easily internalize their wives’ concerns?
In particular:
Health? Education? Child labor? Frictions between household-heads? Scale of business? Repayment rates?
Experimental Design: Key Features
Baseline Survey
2000 interviews with married women clients of Grameen Trust Chiapas
Enables to have basic knowledge of:
General demographic situation, Income, Health, Labor and education, Household decision making of indigenous populations
Randomization, Design & Implementation
511 groups have been “randomly” assigned
Women invite their husbandsWomen invite other women (incentives)Women increase their loan sizeWomen invite their husbands (incentives)
And A “Control” Group
A Major Undertaking
Training branch managers and loan officers
Deal with “unhappy” groups
Staggered contracts
Dynamics across groups
Record keeping
Where This Research Might Lead…
Inclusion of male household heads in microfinance can:
(a) Enable women to become more efficient?
(b) Help to eliminate “frictions”?
(c) Help women to meet their health/education objectives more easily?
Policy
This research might revolutionize current (and potentially misleading) notion of “empowerment” in microfinance, and deliver a message for practitioners and donors:
Design a “microfinance product” whereby women will have their husbands/partners by their side for higher income, health, and education in their households
This is part of a much larger research agenda
Find out what works and what doesn’t in the microfinance arena for meeting the MDGs on poverty reduction, gender equality, health and education
- Next Class:Armendáriz-Morduch (Chap. 8) On “Measuring Impacts”
The MDGs