Microfinance improves Female Empowerment and Self-Awareness

Credit does not only improve living standards through aggregate supply, but also increases women’s empowerment and her overall awareness in a given country. In a study based in Bangladesh examining the effect of micro-credit on women’s autonomy, it was observed that when offered credit, women experience a statistically significant increase in, “the latent empowerment factor associated with finance,” including independence from a husband and ability to freely make financial decisions (Pitt et al., 25). In contrast, “male credit significantly reduced the overall empowerment factor, had a significant negative effect on six of the other empowerment factors and did not have a positive effect on any of them” (Pitt et al., 24). Offering credit and loans to men causes primarily negative effects and makes no developmental progress of any kind, yet another motivation for banks to focus on women as their chief borrowers. Along with this empowerment, women’s autonomy with purchasing, control over economic resources and confidence in their own ability to raise money in case of emergency, all increased. Rarely considered equals of men, women face discrimination and restricted freedom in many developing countries. The study showed, “female credit affects the likelihood that a man will describe his wife as intelligent and the probability that a women will say that she does not view her husband as superior to herself” (Pitt et al., 26). With the opportunity of credit, women’s empowerment increases and slowly equality will spread. Additionally, “female credit positively affects the factor relating to women’s awareness and activism,” including women’s knowledge of divorce options and probability that she will vote (Pitt et al., 26). Such knowledge also increases the human capital of a country, providing better living conditions for the future. By giving women money and in turn, power in their household, not only is the issue of poverty being addressed, but the one of female equality and opportunity as well.