The effect of microfinance on women’s empowerment: Evidence from Malaysia

Abstract

Microfinance is widely known as a financial development tool for those deprived of access to financial services, especially women. However, the literature provides conflicting evidence and shows that women’s empowerment may not, or may only be partially achieved through microcredit, especially in Muslim societies. This study seeks to scrutinize the effect of Amanah Ikhtiar Malaysia (AIM), a microcredit institution, on Malay Muslim women in an urban area. A quasi-experimental method was used to conduct a cross sectional survey of 500 old and new clients. Informal semi-structured interviews were conducted with 20 current clients who had received microcredit two years earlier. The findings show that AIM microcredit empowered the women and enhanced gender equality. It enabled women to access financial capital, form their micro- and small-businesses and obtain an income which helped them to contribute to household expenditure. Even though the effect of microcredit was partial, it provided them bargaining power for decision-making and controlling of resources and enhanced their self-esteem in their households and communities.

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