Assessing the Participation of Women in Microfinance Institutions: Evidence From a Multinational Study

Abstract

ABSTRACT Microfinance institutions (MFIs) typically offer small credit services with no collateral to low-income clients, particularly women microentrepreneurs. Evidence suggests that microcredit services are an effective tool for the social and financial empowerment of women and have a significant impact on maternal health, children's education, and sustainable economic growth. With multiple financial institutions offering various microfinance services, women's participation as borrowers has changed. We examine the variation in women borrowers’ participation rates in 105 developing countries by analyzing participation rates using selected determinants such as legal status, outreach, external control, and target clients. Results indicate a preference for unregulated MFIs, particularly nongovernmental organizations (NGOs), which suggests that in spite of the advent of formal financial institutions, women in developing countries are more likely to seek loans from grassroots MFIs. However, with more commercial banks offering microcredit and microsavings with a preference for borrowers with assets, women could be left behind. This raises important questions regarding the objectives of microfinance services and empowerment of women. Future studies should examine the impact of transformations of NGO MFIs on low-income women clients.