Banking Matters

Does microfinance encourage women to actively participate in the labour market? By providing resources for home-based work, by placing resources in women’s hands and increasing their bargaining power, or by strengthening women’s social networks (Feigenberg, Field, and Pande, 2013), microfinance has the potential to increase participation in the labour force. Yet, short-run experimental evaluations of microfinance have not found significant economic benefits for women (Banerjee et al, 2013; Crépon et al, 2011). Practitioners argue that changes in empowerment and job creation only occur in the longer run.

A second wave of data collection on the same sample allowed us to examine potential channels through which urban microfinance encourages women to actively participate in the labour force. Information on labour supply and business history, as well as concrete measures of decision-making power within households and complete fertility histories was collected. Finally, we also collected information on educational attainment and child age at marriage.