Impact of microcredit on women empowerment: evidence from thrift and credit co-operative societies of Anamaduwa divisional secretariate divisions in Sri Lanka

Abstract

Introduction:

Microcredit can be defined simply as a method of supplying working capital to small scale entrepreneurs. Microcredit and credit-plus services such as consultancy; skill and business development trainings; and market assistance are increasingly used as grass-root instruments for alleviating poverty and improving the poors’ access to financial services in developing countries. The micro-loan is intended particularly for poor women to allow them to collect the required capital needed to start or improve a small business. Women’s empowerment refers to women’s capacity to increase self-reliance, their right to determine choices, and their ability to influence the direction of change by gaining control over material and nonmaterial resources. Empowerment helps to improve the socioeconomic status, political participation and social networks and overall developments of women. It also contributes to the economic productivity and social well-being of poor women and among their household members.

The exisiting empirical and theoretical literature reveal that the evolution of thinking on microcredit and women reflects an acknowledgement of the failure of the formal credit market to reach poor women (Sharma, 2011). Colombage et al. (2008) have claimed that Micro Finance (MF) has positive impacts on client’s socio-economic development at various levels such as at family, business, community and individual. Gunathilake and de Silva (2010) have found that owing the loan increases woman’s control over the loan-assisted project which has a significant and positive impact on her level of empowerment. However, de Mel et al. (2008) has showed that men have the positive impact of microcredit on their income than women borrowers. The above findings diverse the discourse on impact of microcredit on women empowerment.