Academic journal article Journal of International Women's Studies

The Differential Impact on Gender Relations of 'Transformatory' and 'Instrumentalist' Women's Group Intermediation in Microfinance Schemes: A Case Study for Rural South India

Academic journal article Journal of International Women's Studies

The Differential Impact on Gender Relations of 'Transformatory' and 'Instrumentalist' Women's Group Intermediation in Microfinance Schemes: A Case Study for Rural South India

Article excerpt


This article starts from conflicting evidence regarding the impact of microfinance programs on women's empowerment. It explores whether schemes that appear to be very similar on the surface may actually hide deeper differences that can help explain their diverging outcomes. The focus is on group intermediation, a feature that is overwhelmingly present in microfinance programs targeted at women. While group intermediation clearly has paid off in terms of individual programs' financial profitability, it is also increasingly propagated on equity and empowerment grounds. This article argues that it is shortsighted to assume all forms of group intermediation will invariably achieve their empowerment potential, and it explores which factors come into play in this respect. A basic distinction is made between microfinance programs that use women's groups and existing gender relations as instruments to enhance financial sustainability on the one hand and, on the other, programs that rather exploit the capacity of credit to mobilize women, to generate and invest in collective action, and to transform underlying gender relations. This article draws mainly on insights from (critical) institutional and feminist economics and confronts them with empirical evidence from a comparative impact study of credit programs in South India that approach women's groups differently.

Keywords: microfinance, women's empowerment, collective action, South India

Introduction and overview

In the last decade, microfinance has been extolled as a panacea for poverty alleviation and the enhancement of human well-being. However, the confrontation of rhetoric with evidence of effective achievements has somewhat qualified the unbridled enthusiasm of the earlier days. While there is a fairly high degree of agreement on the effectiveness of microfinance as an instrument for increasing the income of those above or on the poverty line, microfinance does not seem to benefit the extremely poor (Mosley, 2001), who in many cases are apparently not even reached (Navajas et al., 2000). Particularly controversial are the effects on women. Although most of the evaluations to date relate to the same South Asian context (1), some are positive about the empowerment potential and supportive of it, while others are skeptical and point at the potential adverse effects of microfinance on women (2). A closer look at several of these studies suggests that such conflicting conclusions may be due to a variety of factors. In her review of Bangladeshi impact assessments, Kabeer (2001) indicates that different evaluations do not necessarily use the same concept of empowerment; nor do they necessarily measure it in the same way. While some focus on changes in individual access to and control over resources, others highlight 'intrahousehold agency', while still others explore 'collective agency' and broader societal changes in terms of gender relations. Conclusions may also differ as a result of diverging research methodologies or opposing subjective interpretations of nevertheless similar findings. Another possible explanatory factor for the conflicting evidence observed is that programs which are classified as similar may in fact contain crucial differences that are ultimately responsible for diverging outcomes.

Many microfinance programs are similar in that they share two features, namely the borrower's gender and the lending technology applied. Indeed, in a 1998 survey of their 925 member institutions, the Microcredit Summit Council of Practitioners reported that about seventy-six per cent of the clients are women. As regards lending technology, many microfinance programs involve a kind of group intermediation between the lender and the borrower. While both features may clearly pay off in terms of a program's financial profitability, they are also often legitimized on 'equity' and 'empowerment' grounds. This article takes a closer look at the empowerment potential of schemes whereby credit is targeted at women through group intermediation, and essentially argues that it is shortsighted to believe group intermediation will invariably lead to a sustainable realization of this potential. …

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