Microfinance and Women's Empowerment: A Comparative Study Between Two Developing Countries

This study proposes a hierarchical framework for the use of microfinance to promote women's empowerment. Surveys were administered to women from Kerala, India, and Chittagong, Bangladesh, who faced economic instability, lack of social recognition, and lack of self-affirmation. These locations were chosen as microfinance had contrasting effects from meeting basic needs in Bangladesh to upward mobility in Kerala, India. Structural equation models using the AMOS analyzed the data. In both locations, women first achieved economic empowerment. At higher levels of empowerment, psychological empowerment with its components of self-confidence, mental toughness, and future planning was observed in the Kerala sample. The Kerala sample showed evidence of social empowerment, including contact with external organizations and social recognition. Governments should increase psychological empowerment and social empowerment in Chittagong. Women entrepreneurs in Chittagong should be given access to loans, mortgages, and business expansion opportunities as their counterparts in Kerala.