Green Microfinance and Women’s Empowerment: Why Does Financial Literacy Matter?

Cheng-Wen Lee,Andrian Dolfriandra Huruta

doi:10.3390/su14053130

Cheng-Wen Lee, Andrian Dolfriandra Huruta

Open Access

https://doi.org/10.3390/su14053130

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Abstract

This study investigated the role of financial literacy in the relationship between women’s empowerment and green microfinance. We set a conceptual model with green microfinance as an outcome variable, financial literacy as a mediating variable, and women’s empowerment as an exposure variable. Variance-based SEM was employed for analysis. The results show that the exposure and mediating variables have a significant direct and indirect impact on the outcome variable. The relationship between women’s empowerment and green microfinance is partially mediated by financial literacy. Local wisdom-based financial literacy is found to be an alternative for mainstreaming women’s empowerment in local development. In addition, gender-targeted programs need to consider pro-literacy policies for achieving green microfinance sustainability. By using financial literacy as a mediating variable, this study contributes to the current literature on the relationship between women’s empowerment and green microfinance.

Highlights

Microfinance is a viable alternative to poverty alleviation in rural areas, and has been examined by many academic researchers [1–13]
To empower women in rural areas, a bottom-up approach based on local wisdom has been implemented [28]
Our findings show that women might improve their financial literacy and empower themselves in green microfinance initiatives through their local wisdom

Summary

Introduction

This study investigated the role of financial literacy in the relationship between women’s empowerment and green microfinance. We set a conceptual model with green microfinance as an outcome variable, financial literacy as a mediating variable, and women’s empowerment as an exposure variable. The relationship between women’s empowerment and green microfinance is partially mediated by financial literacy. Local wisdom-based financial literacy is found to be an alternative for mainstreaming women’s empowerment in local development. Gender-targeted programs need to consider pro-literacy policies for achieving green microfinance sustainability. By using financial literacy as a mediating variable, this study contributes to the current literature on the relationship between women’s empowerment and green microfinance. Microfinance institutions (MFIs) have been identified as organizations that can help developing economies achieve social concerns. Development Goals (SDGs), financial illiteracy affects everyone; women, lowincome people, and those with less education experience significant disparities in financial literacy [14]

Methods

Discussion

Conclusion