Empowering women through microfinance: an evaluation of MFIs influence in Bangladesh

Microfinance institutions (MFI) provide collateral free loans which the subsisting populations of developing countries use as a mean to improve the living conditions of their family. Group lending processes of MFIs also provide peer support for borrowers. This study uses feminist theory and Sen’s capability approach to entrepreneurship to investigate how these loans may change the social and economic status of women, thus empowering them. Participating in lending groups helps women to develop business skills and make decisions, while enhancing their confidence and providing a mutual guarantee for loan repayment. When women are engaged in income generation, they develop liberty and awareness about their rights, learn how to manage small businesses, and enhance their responsibilities towards household finances. This social and economic change, in turn enhances their leadership abilities. The effect of microcredit loans through group lending in empowering women, progress in the community and reducing poverty are observed.