Microfinance - Targetting Women

Strong rate of Loan Repayment

Mon, 09 Mar 2009 11:44:00 -0400

Supplementing group loaning, investors find women (who control 90% of the world’s micro-loans) more dedicated to repayment schedules than men. In 1995, Shahidur Khandker et al. found that 15% of male borrowers missed payments before the final due date, whereas only 1% of women faced such trouble (Armendáriz and Morduch, 143). Armendáriz and Morduch found women more likely to pay because they see fewer options than their husbands and are; “more vulnerable to the shame of noncompliance” and thus banks, “simply knowing that women on average are better clients” have redirected loans towards female borrowers (143). Targeted not only for their productive investments, women have shown more disciplined repayments and given banks a reason to grant them credit.

Yunus Was Right To Target Women

Mon, 09 Mar 2009 11:44:00 -0400

Women, with their dedication to repayment and practical investment decisions are the key to the success of the micro-finance field and the future alleviation of world poverty. The 2006 Nobel Peace Prize winner, Muhammad Yunus had the right idea when he decided to conduct business in the opposite manner of traditional banks, “if banks lent to the rich, I lent to the poor” initiating the practice of micro-finance (Hawser, 25). Muhammad Yunus determined the best way to help the poor was to empower them, and results have shown that targeting women provides the most significant outcomes. Not only do the loans best help women, but also women prove to work as the best vestibules for economic encouragement. Micro-finance’s positive effects, evident in Bangladesh, are beginning to show up in other countries around the world. With over $3.66 billion in loans by the Grameen Bank alone, the micro-finance field holds a respected position in the world and many countries have included the practice of micro-loans in their poverty reduction programs. Muhammad Yunus has set the world in the right direction by giving the female-dominated poor, the gift of opportunity through credit. The most realistic approach to tackling world poverty seen yet, helping women to improve their lives and their countries through micro-finance, will hopefully continue ease the pains of world poverty as it grows.

Women are Lower-Risk Borrowers and Allocate Money Better

Mon, 09 Mar 2009 11:43:00 -0400

Proven to be lower-risk borrowers, women also choose sensible and development-promoting investments for themselves, their children and their country. Recent data in both sociology and economic reports displays the, “greater probability that money in the hands of women is spent on children’s health and education relative to money in the hands of their husbands” (Armendáriz and Morduch, 143). Focusing on women to allocate borrowed money works as a more productive method to increase the living standards in a country. Addressing children’s health lengthens the life span of a child and decreases the likelihood of future problems if proper habits are developed early. Education, often a luxury for those in underdeveloped countries, can become a reality with micro-loans, improving not only the child’s future, but also the future of the country.
With a healthier, more educated population, the growth of aggregate supply continues.

Microfinance improves Female Empowerment and Self-Awareness

Mon, 09 Mar 2009 11:43:00 -0400

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.

Targetting Women

Mon, 09 Mar 2009 11:42:00 -0400

Over the years micro-loans have targeted women, who dominate the poorest populations. Women make prudent investment decisions for themselves, but also ones that improve their children’s lives and contribute to the potential of their country. Offering credit produces a great effect on enhancing the lives of women, whereas it offers few advances to men. Proven to obey more consistent repayment rates, women are labeled as the lowest-risk borrowers. Through its provision of credit focusing on women, micro-finance empowers poor women and helps to alleviate the strongest symptoms of poverty and advance underdeveloped countries.

Women Make up The Majority of the poor

Mon, 09 Mar 2009 11:42:00 -0400

Today 1 billion people survive on less than $1 a day, the great majority of whom are women. To most effectively tackle the issue of world poverty, those who are most affected must be addressed, meaning women. Even at its inception, the Grameen Foundation sought out women borrowers, but not only does the Grameen foundation target women, 90% of loans in the micro-finance field worldwide are to female borrowers (“Bangladesh”). Women account for somewhere around half of the population in a given country. Without economic independence or power, women can make little or no impact on the economy. Given a loan, a woman can create her own small business and become a contributor not only to her family, but to her country as well. Alex Counts, the CEO of the Grameen Foundation rationalizes, “‘if 110 million people increased their per capita income by $3 a day, every day, that starts to become more meaningful on an aggregate level,’” explaining the great power that issuing just small loans can have (Hawser, 24-5). Loans affect more than just the people they are granted to, but continue to ripple throughout the economy as the money is utilized and spent. Women make up a significant proportion of any population, so having them go from no to even a small amount of income has a considerable impact on the macro economy. Aggregate supply, the only factor that allows a country to grow in the long run, is accounted for by, natural resources, labor, technology, capital and education. If any one of these factors is increased, overall output and therefore GDP can be increased, helping to lift a country out of poverty. Micro-loans help to utilize those previously unused resources in a country such as the unemployed poor and force them to effect the economy in a positive manner. Through micro-loans increase in potential GDP, both the economy and living standards are boosted for current and future generations. Granting women micro-loans amounts to finding an untapped natural resource within a country’s earth.