Women’s empowerment has become a prominent issue in developing countries. And microcredit program has been considered as a major development tool for poverty alleviation and lifting the poor, especially women, out of poverty. Bangladesh is one of the densely populated countries in the world. This paper examined the way in which microcredit schemes have improved the empowerment of women in rural Bangladesh. The data was collected from 324 rural women borrowers on a field study from six villages in the district of Tangail, Bangladesh through the administration of questionnaires. This survey was conducted during the period of July to December, 2016. Data was also collected from women non-borrowers to compare the impact between borrowers and control-group. Data has been analyzed by SPSS software and also Logistic Regression is used to estimate the enhancement of women’s empowerment those who associate with microcredit program. A significant outcome of this research showed that microcredit has a positive improvement on women’s empowerment. The results confirmed that microcredit has both significant and positive impact on women’s empowerment.

Microcredit, Effects, Women’s empowerment, Rural women, Bangladesh.

Women’s empowerment has become a prominent issue in developing countries. And microcredit program has been considered as a major development tool for poverty alleviation and lifting the poor, especially women, out of poverty. Bangladesh is one of the densely populated countries in the world. This paper examined the way in which microcredit schemes have improved the empowerment of women in rural Bangladesh. The data was collected from 324 rural women borrowers on a field study from six villages in the district of Tangail, Bangladesh through the administration of questionnaires. This survey was conducted during the period of July to December, 2016. Data was also collected from women non-borrowers to compare the impact between borrowers and control-group. Data has been analyzed by SPSS software and also Logistic Regression is used to estimate the enhancement of women’s empowerment those who associate with microcredit program. A significant outcome of this research showed that microcredit has a positive improvement on women’s empowerment. The results confirmed that microcredit has both significant and positive impact on women’s empowerment.

Microcredit, Effects, Women’s empowerment, Rural women, Bangladesh.

Microcredit programs have become a proven tool against poverty in mostly developing countries of the world [1]. Bangladesh has a fast growing economy and with its about 168 million inhabitants, which is one of the largest density countries in the world. However, a large part of this population is still very poor [2]. From 2004-2014, Bangladesh averaged GDP growth rate of 6%. The economy is increasingly led by export oriented industrialization [3]. Even though the GDP growth rate, industrialization and per capita income are developing in Bangladesh but poverty as the anathema still exists in Bangladesh [4]. According to 2013 Census in Bangladesh 25.15% of women lives in urban area and 74.85% lives in rural area from the total population [5]. In Rural Bangladesh, most of the women belong to the deprived section of the society. They face adverse conditions in terms of economic equality and social persecution and a large number of them are extremely poor [6].

This study examines the impact of microcredit on women’s empowerment in Tangail district of Bangladesh. However, microcredit programs practically target women and it is an important tool to empower women from the poor household level. In Bangladesh, Microcredit has been considered as an antipoverty program that reaches to the poor people especially women [7]. Employment women always play a crucial role to enhance the national income of the countries and manage a sustainable existence of the societies, families and communities throughout the world. From the primitive society, women have been marginalized. They are hardly independent by the financial condition and decision-making process and often they face more vulnerable problems of society [8].

As a Microfinance Institution in Bangladesh was initiated by Grameen Bank and has been running successfully in Bangladesh for more than forty years. The main focus of Grameen Bank is the empowerment of rural women [9]. The major purpose of microcredit in Bangladesh is savings mobilization and credit disbursement [10]. It is the most magnificent antipoverty tool for the poorest, especially for the women [11]. It is assumed that 25 million populace worldwide are now using microcredit to manage incomegenerating or self-employment activities; of those 90% are women [12]. Microcredit program provides loans at very low interest and systematic guidance to low-income women to pursue alternative income-generating activities aimed at improving their economic and social status. The program provided women with loans to improve their existing economic activity or to start a new project. Such investments would lead to social and gender equality in the country and would enhance the elimination of poverty [13].

Women’s empowerment is a global challenge because most women have been relegated to the back side and subjected under control of men as a result of unfair social, cultural and political structures in many parts of the world. About 70% percent of world’s poor are women and about 65% percent of women in Bangladesh live in absolute poverty [14]. These poor women have no access to financial services from conventional banks for lack of collateral security. According to the World Bank, “women have a limited role in household decision-making, limited access and control over household resources, the low level of individual assets, heavy domestic workloads, restricted mobility and inadequate knowledge and skills that leads them to vulnerability” [15]. In the family, men are still considered as heads of households which limit women in influencing allocation of domestic resources [16]. Prior researches have indicated that there exit inherent problems limiting women’s accessibility to microfinance services [17,18]. In this study, the limitations of microcredit according to the response of the sample are as follows: high interest rate, small size loan, and unfavorable repayment system, problematic system of group dynamics and lack of skill.

Considering the above research background, the principal objective of this research is to analyze women’s empowerment through microcredit and the specific objectives are:

Microcredit is a way of delivering loans to poor individuals and is often suggested to be a way out of poverty [19]. Microcredit, which is a fundamental component of Microfinance, refers specially to loans and the credit needs of poor borrowers. Microcredit is designed as a system of credit distribution and mobilizing savings specially to meet the financial requirement of the poor [20]. In microcredit programs, poor people get a loan without security or a fixed income provided that they use it to start a business project. Loans are usually paid back in daily, weekly or monthly installments. To ensure greater security for the loans, microcredit programs provide loans to groups of people rather than individuals although lending to individuals has become more popular. Today Microcredit schemes offer diversified loan products to the poor under the umbrella of “Microfinance” [21].

The term “empowerment” has lots of definition by different scholars. From the psychological perspective, empowerment is control over oneself and the conditions one lives in [22]. Empowerment is a process that follows a series of steps sequentially in which ownership of one type of power increases the ability to exercise other forms of power. This creates a positive “power spiral” [23]. Women’s empowerment begins when they become aware of the socioeconomical inequity that is being imposed to them and it starts with the understanding of women’s positive self-image, self-esteem, self-confidence, rights and duties, capabilities and potentialities [24]. The empowerment of rural women is about expanding women’s assets and capabilities to participate in, negotiate with, influence, control and hold accountable the institutions that affect their lives [25]. Based on central meaning, women’s empowerment was considered as a dependent variable in this research to be measured in five dimensions that we believe to represent the expansion of choice and freedom of women to make decisions, as well as to take the actions which are necessary to influence their life outcomes [26,27]. These are:

In Bangladesh, there are many Microfinance Institutions (MFIs) providing their services to the borrowers especially rural women. In this study, top four famous Microfinance Institutions (MFIs) has been discussed as follows:

The Bangladesh Rural Advancement Committee (BRAC), the largest non-organization in Bangladesh, was founded in 1972 as a relief organization for the post-war period. The founder of BRAC, Mr Fazle Hasan Abed realized that pervasive governmental poverty could not be addressed with short-term relief measures. Thus in 1973, BRAC shifted its focus from relief to long-term community development. It started its operation with the objective of improving the economic and social status of the rural poor. Since launching our microfinance activities in 1974, BRAC has grown to become one of the world’s largest providers of financial services for the poor. Today, BRAC operates over 2,000 branches in all 64 districts in Bangladesh. The Grameen Bank of Bangladesh is one of the largest microcredit institutions in Bangladesh. In 1976, Professor Yunus tried an experimental research project in a village near Chittagong University. By establishing Grameen Bank in 1983, Muhammad Yunus sought to realize his vision of self-support for the very poorest people by means of loans on easy terms. When Grameen Bank was awarded the Peace Prize in 2006, more than seven million borrowers had been granted such loans. The total number of members of the Grameen Bank (the largest microcredit provider in Bangladesh) increased to over eight million in 2010. Association for Social Advancement (ASA) is one of the largest providers of microcredit in Bangladesh. The organization is now more commonly known simply as “ASA”, which Bangla meaning is “hope”. ASA was founded in 1978 and is a non-governmental organization whose main mandate is poverty reduction. In 2010, ASA had over five and half million microcredit members, with 71% of members being women. In 2008, Financial Times (FT) and the International Financial Corporation (IFC) jointly awarded ASA the “FT Sustainable Banking Award” in the category “Banking at the Bottom of the Pyramid” [28]. In 2007, Forbes Magazine ranked ASA as the top MFIs in the world [29]. BURO Bangladesh is a national non-government development organization that was established in 1991. Their target is to work for the poor and rural people to reduce poverty. Over the years, the organization has specialized in providing microcredit to the rural poor and it currently serves 1.1 million poor individuals, particularly women, via 632 branch offices in all districts of Bangladesh. BURO Bangladesh offers a range of different financial services including loan-, saving- and insurance services to both men and women [30].

This research is based on a field survey that was conducted in Tangail district of Bangladesh. The Tangail district is located in the north-western part of Bangladesh and 100 km from Dhaka, the capital of Bangladesh. Six villages were selected from Tangail district, Bangladesh namely: Mirzapur, Nagarpur, Basail, Kalihati, Ghatail and Madhupur for the field survey using the main criterion that there must be a Microcredit program with clear eligibility criteria operates in the district. Three MFIs were selected by using purposive sampling technique. Another reason to select these villages as a study area because most of the women were involved with microcredit program. The survey was conducted during the period of July to December 2016.

The respondents of this research are rural women borrowers belong to Mirzapur, Nagarpur, Basail, Kalihati, Ghatail and Madhupur region of Tangail, Bangladesh. The data were collected from 324 women respondents following one to one communication method with a well-structured questionnaire. The female respondent was selected who have been used microfinance services during ten years from 2004-2014. The empirical material was chosen as an appropriate district since it, according to staff members of GRAMEEN BANK, BRAC and ASA is representative of Bangladesh in some aspects.

After collecting, data has been sorted, filtered and placed in tabular form to present the same in an organized manner to make them more illustrative and explanatory. Statistical tools used for the study comprise of mean, index, regression, t-test and other calculations that measures the probability that a chosen univariate dataset is drown from the same parent population and descriptive statistics were used to explore the women’s empowerment and role of microcredit behind of this empowerment. The questionnaire consists of factors which have been identified for literature review. Question has been set on 5-point scale ranging from 1=Not at all important to 5=Very important. Data has been analyzed by SPSS and STATA software. Some of the approaches used for data processing and analyzing are hereby described.

The respondents are asked to prioritize the limitations of microcredit with five-point scale. The formula of P.I is given below:

Where, P.I =Priority Index
S_i=Scale value of i^th priority
f_i=Frequency of i^th priority
n=Total number of observations

The limitations of microcredit used to construct priority index according to the response of the sample are as follows, high interest rate, small size loan and unfavorable repayment system, problematic system of group dynamics and lack of skill (Table 1).

Logit regression has been used to evaluate the statistical relationship between microcredit and empowerment of the borrowers. The impact of microcredit is empowering the women borrowers has been analyzed by taking opinion of the borrowers [31] about their own status within the family and society, whether they feel empowered or not, whether their status has improved in the family and society, after using at least five times of microcredit in the family.

Here empowerment of the women borrowers has been taken as dependent variable and per capita income and proportion of earners having microcredit out of the total number of earners in the household has been taken as independent variables to estimate whether microcredit is helpful in increasing the empowerment of women borrowers. The Logit model specified in this research expressed as follows:

The use of maximum likelihood estimation (MLE) determines the coefficients that maximize the probability (or likelihood) of the sample data. The likelihood function treated as a function of the unknown coefficients β is given by Verbeek [32]

Accordingly, the log likelihood function is:

where P_n=P{Y_n=1|X_n;β} denotes the probability of accessing microcredit. Using the formula for logit probabilities, the log likelihood function for the logit model can be written as:

The empirical material was chosen as an appropriate district since it, according to staff members of GRAMEEN BANK, BRAC and ASA, is representative of Bangladesh in some aspects.

In Table 2, depicted that a significant proportion of respondents (n=139, 41.8%) were of the age group of 31- 40. Maximum respondents were married (n=245, 76%) and living in joint families (n=215, 69.6%) with a family size above 7 members (n=173, 53.8%). Maximum respondents taking loan for the reason of Agriculture (n=94, 28.5%) and loan taking maximum time 11-15 times (n=133, 41.1%). Through maximum respondents were illiterate (n=130, 41.1%), it is also observed that a significant proportion of the respondents (n=114, 34.8%) were having education up to primary. Only 1% (n=1) respondent were having postgraduation degree that shows the existence of the traditional phenomenon of the low level of education among females.

Table 3 shows the mean score of the women’s empowerment dimensions and other socio-economic factors. The minimum score of economic decisionmaking empowerment was 1.60, household decisionmaking empowerment was 1.57, freedom of movement empowerment was 1.40, ownership of assets empowerment was 1.69, social and political awareness empowerment was 1.95, aggregate women’s empowerment was 1.69, age was 20 years, education was 0, family size was 1, loan size was 2,000 Taka and annual income was 2,000 Taka. The maximum score of economic decision-making empowerment was 4.97, household decision-making empowerment was 4.65, freedom of movement empowerment was 3.80, ownership of assets empowerment was 4.70, social and political awareness empowerment was 4.89, aggregate women’s empowerment was 4.42, age was 55, education was 18, family size was 9, loan size was 25,000 Taka and annual income was 40,000 Taka. The mean score of the women’s empowerment dimensions and other socio-economic factors. The mean score of economic decision-making empowerment was 2.95, household decision-making empowerment was 2.99, freedom movement empowerment was 2.44, ownership of assets empowerment was 2.95, social and political awareness empowerment was 3.61, aggregate social capital index was 2.98, age was 32.50, education was 3.59, family size was 6.55, and annual income was 11999.999 Taka.

In Table 4 shows the estimation result for Logit Regression analysis. The table shows the coefficients of the independent variables which examine the effects of loan size, annual income and involvement in income generating activities among members of microcredit program on women’s empowerment. So, we found that all these variables: the size of loan, annual income and involvement in income generating activities among borrowers of microcredit are significant and has a positive correlation with the overall empowerment of those participated with MFI. Thus, women that involve in income generating activities are informally trained to make their own decision compared to those did not involve in income generating activities. This research examines that, involvement in income generating activities may lead to higher level of empowerment.

Based on the estimated results, all the variables are found to have significant influence on women’s empowerment. The results also indicated that the estimated coefficient for involvement in microcredit is significant at 1% level of probability and have a positive value not only for women’s empowerment but also for each dimension of empowerment.

In Table 5 shows the result that the factors related to empowerment dimension as well as total empowerment. The coefficient of economic decision-making empowerment was 0.997. This indicates that for each unit increase MFI (Microfinance Institution), economic decision-making empowerment increases by 0.997 units. The Coefficient of household decision-making empowerment was 0.809. This indicates that for each unit increase MFI, household decision-making empowerment increases by 0.809 units. The coefficient of freedom of movement empowerment was 0.954. This indicates that for each unit increase MFI, freedom of movement making empowerment increases by 0.954 units. The coefficient of ownership of property empowerment was 0.941. This indicates that for each unit increase MFI, ownership of assets empowerment making empowerment increases by 0.941 units. The coefficient of social and political awareness empowerment was 0.768. This indicates that for each unit increase MFI, social and political awareness empowerment making empowerment increases by 0.768 units. The coefficient of total empowerment index was 0.899. This indicates that for each unit increase MFI, Aggregate empowerment increases by 0.899 units. Among the background characteristics, the table shows that coefficient of women age is positive of all women empowerment dimensions and total women empowerment. The result shows each unit increases the education. Economic decision-making and household decision-making empowerment decreases by 0.072 and 0.057 units but the reverse result found in aggregate women’s empowerment. Each unit increases education, aggregate empowerment increases by 0.031 units.

The coefficient of annual income on economic decisionmaking was 3.45. This indicates that for each unit increase annual income, economic decision-making empowerment increases by 3.45 units. The coefficient of annual income on household decision-making was 2.20. This indicates that for each unit increase annual income, household decision-making empowerment increases by 2.20 units. The coefficient of annual income on freedom of movement was 0.998. This indicates that for each unit increase annual income, freedom of movement empowerment increases by 0.998 units. The coefficient of annual income on ownership of assets was 0.045. This indicates that for each unit increase annual income, ownership of assets empowerment increases by 0.045 units. The coefficient of annual income on social and political awareness was 4.75. This indicates that for each unit increase annual income, social and political awareness empowerment increases by 4.75 units. The coefficient of annual income on aggregate empowerment was 3.33. This indicates that for each unit increase annual income, aggregate empowerment increases by 3.33 units. The result shows that the aggregate empowerment of family size, loan size, marital status and involvement with MFI increases by 0.068, 0.725, 0.186 and 0.895 units.

So, our research provides the evidence that participation in microcredit does improve or enhance empowerment of rural women. This result implies that microcredit plays a significant role in empowering women, at least as far as Bangladesh is concerned.

This study tries to examine the impact of microcredit on women’s empowerment in rural area of Bangladesh. This study shows that microcredit programs has improved their economic condition and enhanced their ability to contribute in their family’s decision-making. The microcredit participants are more capable of taking their economic and household decision-making [26]. Involvement in microcredit program not only enhances the ability of make decisions in various project activities but also enhances the ability in household decision-making process [8]. This study shows that in every source of personal annual income of women had positive impact on women’s empowerment. Women who have involved with income generating activities may lead to higher empowerments that are not involving any income generating activities [33]. Microcredit is an important strategy in empowering income for poor women [34].

This study reveals that Microcredit enables the women to cope easily during crisis, creates new earning source, build assets and improve their social and economic status [35]. Economic condition is an important factor of empowerment of people [34]. From this study, we can observe that Borrowers women are more Socio-Economically empowered than Non-Borrowers women. The findings of the study of Parveen et al. also supported this result [36]. Evidence supports that involvement in microcredit programs increases the socio-economic awareness of the women [37]. A research conducted in Bangladesh by Khan et al. presented that microcredit participants women were abler to in decision-making regarding conjugal life, loan taking, spending money received from microcredit, interest in politics, voting behavior and purchase or sale of materials compared to non-participants in microcredit programs [38].

Microcredit programs in Bangladesh represent a breakthrough for rural financial markets. This study empirically evaluates the impact of microcredit on women’s empowerment in Tangail district of Bangladesh. This study examines the impact of microcredit programs on its borrowers through the collection and compilation of primary source data. After data analysis the researcher has finalized that most of the women who availed the facility of microcredit finally got socio-economic empowerment. Microfinance provides opportunity to women keeping involved in economic and trade activities by own business, which enhances women’s empowerment at a visible extent, pronouncing a positive impact on education, share in total assets and respectable jobs, lending to the higher living standard, rich nutrition and economic prosperity and development. So, at the end it may be concluded that microcredit is positively associated with the uplift of socioeconomic empowerment of working women at district Tangail in Bangladesh. Most importantly this study shows that microcredit programs are successful in empowering women.