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Borrowing and Women’s Empowerment: Does Type of Credit Matter?

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Listed:
  • Isabelle Agier
  • Supriya Garikipati
  • Isabelle Guérin
  • Ariane Szafarz

Abstract

Poor women have complex financial lives. They borrow from a variety of sources. So far, however, research has focussed only on formal borrowing as a source of women’s empowerment. This study examines whether type of borrowing matters to women. We differentiate between ‘easy loans’ – that are easy to access and have flexible conditions – and ‘contracted loans’ – that require a contractual agreement, usually written. We examine whether type of loan matters for one dimension of women’s empowerment – their bargaining power in household decisions. We separately consider women’s role in routine and strategic decisions. Drawing on a household survey from Tamil Nadu, we find that easy loans support women’s bargaining power in household decisions, whereas contracted loans have no impact. Women rely heavily on easy loans because of their flexibility. These loans, however, are usurious and lenders are known to use coercion to elicit compliance. This suggests a niche in the market for institutional providers.

Suggested Citation

  • Isabelle Agier & Supriya Garikipati & Isabelle Guérin & Ariane Szafarz, 2013. "Borrowing and Women’s Empowerment: Does Type of Credit Matter?," Working Papers CEB 13-038, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:2013/150440
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    Cited by:

    1. Carolina Laureti, 2015. "The Debt Puzzle in Dhaka’s Slums: Do Poor People Co-hold for Liquidity Needs?," Working Papers CEB 15-021, ULB -- Universite Libre de Bruxelles.

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    More about this item

    Keywords

    Credit; Microfinance; Women’s Empowerment; Tamil Nadu; India;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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