Whose voice matters? An experimental examination of women empowerment in microfinance

Offering microfinance loans to women to empower them may be ineffective if borrowers hand over control of loans to their husbands. We conduct a lab-in-the-field experiment to examine potential gender bias in intra-household decision making in rural Bangladesh. The experiment mimics a real-life scenario in which a microfinance loan is offered to either the wife or the husband and the borrower can decide whether or not to transfer the decision to his/her spouse. We find that women are more likely to let their spouses make decisions than men. Different treatments in the experiment test the underlying causes. Our findings suggest that women’s decision to transfer decision making is driven both by their lower decision-making power and their belief in their spouses’ higher financial capabilities. We also examine subjects’ control over the use of earnings and find that offering credit to women has no effect on their control over household expenditures.