Student Research Projects
Micro-Finance Organizations and Their Effect on Female Economic Empowerment in the Developing World.
Since Muhammad Yunus introduced the concept of micro-credit with the Grameen Bank in 1983, the idea of providing small, collateral-free loans to poor people in underdeveloped countries has revolutionized world economic development and has begun to eliminate poverty. Yunus took micro-credit one step further by focusing on providing credit to women. He believed that “lending to women creates a cascading effect that brings social benefits as well as economic benefits to the whole family and ultimately to the entire community.” This paper examines whether the short-term, positive effects of micro-lending to women translate into long-term female economic empowerment. It argues that micro-finance organizations cannot effectively yield female economic empowerment due to their institutional and managerial restraints. Even though micro-finance organizations promote women’s economic success by integrating them into the economy and providing them with small collateral-free credit loans to start up their business, in the end, such programs limit women’s growth potential in the formal economy because the autonomy of individual women is restrained by collective decision-making in the cooperative groups.