Measuring the Impact of Microfinance on women empowerment amongst the women in Rural Gujarat

 

Dr. Viral Bhatt¹, Prof. Shital Shastri

¹Supervisor, Gujarat Technological University, Ahmedabad

²Research Scholar, Gujarat Technological University, Ahmedabad

 

ABSTRACT:

Microfinance scheme is focused for the betterment of poor class of society who does not have access to formal financial sector and are not able to arrange for collateral. To fulfil their requirements of small amount, the microfinance scheme is one of the best source of borrowed funds. In India, microfinance services are basically provided in two ways, through SHG-Bank linkage programme and another is through microfinance institutions (MFIs). Though government is focusing on microfinance sector to enhance the life of poor people, it becomes necessary to understand its impact on beneficiaries. The correlation andregression model is used to understand relation and measuring impact. The serious attempt was made to collect the opinion of 627 respondents and correlation and multiple regression is applied to analyse the results.

 

 

 

1. INTRODUCTION:

Microfinance in world:

The microfinance concept was got more importance in the 1960s and 1970s and at that time the institutions like ACCION International (Khandelwal, 2007).in Venezuela, and Yunus’ Grameen Bank in Bangladesh started the initialized of the process. The Yunus’ experiment on Grameen Bank got massive support and became huge movement and it was the turning point for the microfinance sector in the world. These microfinance institutions changes the concept of microfinance from just loan (mainly it was used for food, shelter, clothing or personal or social purpose) (microfinance-and-micro-loans, 2018).

 

 

Yunusbelieved that if a poor wants to start new business, it would be helpful if they were free from start-up-debt and it would support them for concentrating on new business instead of repayment burden. Yunus and Grameen bank came up with the idea so that poorest of the poor can also think about their own development with the support of loan amount to start new business.

 

Microfinance in India and Gujarat:

Informally, microfinance concept was prevailed in India since long time in the different forms and it can be understand when merchant banking were prevailed in India withthe concept of caste based interest rates(Arena, Sat, Oct 1, 2011).In primitive age, chit fund enterprises and Rotating Saving and Credit Associations (ROSCA) was very famous for small amount lending. During 1970s, NGOs initialised the process with the collaboration of financial sector to provide financial support to the poor people. Self Employed Women’s Association (SEWA) has initiated the institutions with the trade union for needy women in unorganized sector(Home page, 2018). Later on the movement was pushed up with Women’s Bank (SEWA Bank), an urban co-operative bank in Ahmedabad of Gujarat started providing banking services to the poor women of unorganized sector. Consequently, after NGOs like Working Women’s Forum (WWF) of Chennai, MYRADA of Bangalore, Adithiof Patna, SPARC of Hyderabad, PRADAN in Tamil Nadu and Bihar ASA in Trichy, etc. also materialized and engaged themselves in providing micro credit facility to the poor people for their upliftment.

 

2. LITERATURE REVIEW:

Verma R.et.al, (2012)   had the same views and added that 87% of India’s poor does not have formal sources of finance and their dependency on money lenders are still high. Microfinance became community-based or it is in-house banking model. It needs more support to poor people for better utilization of finance. The authors have also added that proper utilization of microfinance schemes are able to support financial stability and substance in the economy and can support in development of India in their path of reaching to developed economies. 

 

Brana (2013) expressed that by giving a starting capital, micro lending should enable a greater number of women to create their own business but also in sectors traditionally reserved for men.

 

Majority studies have established that women’s accessibility to financial resources is the important mechanism to address different issues of poverty at the household as well as village level (Dichter, 1999; Wright, 1999; Rahman, 1999; Mayoux, 1998b; Amin et al., 1998; Kabeer, 1998; Johnson and Roglay, 1997; Hulme and Mosley, 1998; Hashemiet al., 1996) which later on results into increased wellbeing of the family as a whole (Hashemi et.al, 1996;  Hulme and Mosley,1996;  Kabeer,2001;  Mayoux,1997).

 

Badatya et.al. (2006) reported that employment generated by households taking up micro enterprises increased by 81 percent as against the households not taking up any microenterprise, clearly establishing the impact of the programme made on the lives of the poor.

Rankin (2001) considered microcredit scheme focusing women to be the major feature of donor strategies to alleviate poverty. Particularly, the financial inclusion of women makes them the agent of their own empowerment and helps themselves reducing the household’s poverty well as the village level (Pitt and Khandekar,1998) and national level poverty (Das and Jena, 2012).

 

 

3. RESEARCH METHODOLOGY:

3.1 Objective of research:

·        To study the microfinance credit facility in rural area of Gujarat.

·        To investigate the pattern of funds flows among the rural women of Gujarat.

·        To analyse the impact of different factors on women empowerment.

·        To understand the relationship between independent and dependent variables.

 

In order to achieve above objective, ten hypotheses have been framed and tested and it is included in analysis section.

 

3.2   Scope of research:

In India, many studies have focused on microfinance taking into account the different issues and regions. The studies on rural women of Gujarat are lacking. Gujarat is the fastest growing state in Indian economy. During the past decade, it is among the top 4 states of India in terms of economic growth. Gujarat is known for the highest level of women empowerment. But it is necessary to find whether empowerment of women exists equally in rural and urban areas. Besides, there is lot of social and economic disparity in Gujarat. Some districts have a very high level of socio-economic development. In order to know whether the microfinance credit facility has reached the rural women and whether rural women are able to grab the benefit and have become a successful entrepreneur, the proposed would undertake the case of Gujarat. By focusing on the rural women beneficiaries of Gujarat, the study would be able to find the positive and negative factors in the path of women to be an entrepreneur. By determining the flow of funds, the study would be able to highlight the role of banks as well as the family and society constraints in women empowerment. Thus the study would determine status of rural women entrepreneur and would help the policy makers and researcher to frame a proper strategy for the other states as well. Covariance sampling is perform to understand the opinion of 627 respondents.

 

3.3   Sources of data:

Secondary sources would consist of the Government reports. The Primary data would be collected with the help of structured Interview schedule from the Structured Questionnaire.

 

3.4   Sampling technique:

3.4.1  Type of study :

Empirical Study

 

3.4.2  Area of study:

Rural area of Gujarat

 

3.4.3  Universe:

Women beneficiaries of microfinance in Rural Gujarat.

 

3.4.4   Sample:

Sample would be selected with the help of multistage random sampling method. The research has done the study in 3 districts of Gujarat selected based on the development of the districts. In selected villages, 2 villages from each districts are selected based on its distance from the district centre and one village is near to district centre and the another is far from the district centre. The total respondents are 120 from each villages and researcher has finally done the analysis for 627 female respondents based on data collection.

 

3.4.5   Research tools used for data analysis:

In order to analyse the data, test hypotheses and achieve the objective, co-relation analysis and regression model has been applied.

 

4. DATA ANALYSIS AND FINDINGS:

Correlation Analysis:

It is important to understand inter-relations and effect of every component on women empowerment. Estimation of connection coefficients demonstrates quality of relationship between 2 variables. Here we have arranged intra connection network of all elements we have used two tailed Pearson correlation to understand inter-relationship amongst variables. If r value is less than 0.30, it shows weak relationship amongst 2 variables.  If the value of r is between 0.30 to 0.50, it indicates medium relationships between 2 variables while r with more than 0.50 value indicates strong relationships between selected two variables. We have additionally checked whether these components are noteworthy at 1% level.

 

Table 1.1 Correlation amongst variables

Correlations
		CLP1	CSR1	CUL1	CAU1	CEM1
CLP1	Pearson Correlation	1	.595**	.522**	.556**	.545**
	Sig. (2-tailed)		.000	.000	.000	.000
	N	627	627	627	627	627
CSR1	Pearson Correlation	.595**	1	.532**	.532**	.551**
	Sig. (2-tailed)	.000		.000	.000	.000
	N	627	627	627	627	627
CUL1	Pearson Correlation	.522**	.532**	1	.518**	.572**
	Sig. (2-tailed)	.000	.000		.000	.000
	N	627	627	627	627	627
CAU1	Pearson Correlation	.556**	.532**	.518**	1	.856**
	Sig. (2-tailed)	.000	.000	.000		.000
	N	627	627	627	627	627
CEM1	Pearson Correlation	.545**	.551**	.572**	.856**	1
	Sig. (2-tailed)	.000	.000	.000	.000
	N	627	627	627	627	627
**. Correlation is significant at the 0.01 level (2-tailed).

1.      H₀:

There is no significant relationship between loan procedure and saving related issues.

H₁: There is a significant relationship between loan procedure and saving related issues.

 

The r value of 0.595 and it indicates positive strong relationship between loan procedure and saving related issues so null hypothesis is failed to accept.

 

2.      H₀:

There is no significant relationship between loan procedure and uses of loan amount.

H₁: There is a significant relationship between loan procedure and uses of loan amount.

 

The r value is 0.522 and it indicates strong positive relationship between these two variables. It indicates the loan procedure has impact on uses of loan amount so null hypothesis is failed to accept.

 

The overall analysis indicates strong positive correlation amongst all the variables with each other with r value of more than 0.5.  It indicates inter-relationship amongst all variables with remaining variables and it shows significant relationship amongst all variables.

 

REGRESSION ANALYSIS:

The researcher need to pay attention on four factors therefore the multiple regression model is suggested to apply and derive the impact on women empowerment. Through the questionnaire, various statements are designed for different variables, these statements are raised in a five point summated scales and tried to derive the overall impact of four independent variables on the dependent variable called as an change in women’s life. For this research, the regression model is designed with independent variables of the models.

 

 

 

The researcher tries to understand the impact of independent variables on overall women empowerment (CWL). This independent variables are loan procedures (CLP), saving related matters (CSR), use of loan amount (CUL) and women’s autonomy (CAU).

 

Table 1.2 Model Summary

Model Summaryb
Model	R	R Square	Adjusted R Square	Std. Error of the Estimate	Change Statistics					Durbin-Watson
					R Square Change	F Change	df1	df2	Sig. F Change
1	.871a	.759	.758	3.010	.759	490.194	4	622	.000	1.348
a. Predictors: (Constant), CAU1, CUL1, CSR1, CLP1 b. Dependent Variable: CWL1

 

In multiple regression, the researcher needs to evaluate that whether the model is significant or not with the support of model testing summary.

 

H₀: The multiple regression model is not significant.

H_1: The multiple regression model is significant.

 

The model testing summary indicates significant value of 0.00 and it is less than 0.05 it means the null hypothesis is failed to accept and it means that the research has to accept alternative hypothesis and it indicates that multiple regression model is significant.

 

H0: There is no significant impact of combined influence of all four independent variables (loan procedure, saving related matters, usage of loan amount and women’s autonomy) on dependent variable (women empowerment).

 

H1: There is significant impact of combined influence of all four independent variables (loan procedure, saving related matters, usage of loan amount and women’s autonomy)on dependent variable (women empowerment).

 

Here the value of F is less than 0.05 it clearly indicates that multiple regression model is significant and combine influence of four independent variables i.e. loan procedure, saving related matters, use of loan amount and women’s autonomy shows significant impact on dependent variable, women’s empowerment.

 

Table 1.3 ANOVA Analysis and hypotheses testing

ANOVAa
Model		Sum of Squares	Df	Mean Square	F	Sig.
1	Regression	17768.670	4	4442.167	490.194	.000b
	Residual	5636.597	622	9.062
	Total	23405.266	626
a. Dependent Variable: CWL1 b. Predictors: (Constant), CAU1, CUL1, CSR1, CLP1

 

In the second stage of multiple regression the research want to derive that whether independent variable have significant impact on dependent variable or not. To understand this, the researcher has applied ANOVA test to check the significant impact.

 

H_0: There is no significant impact of all independent variables (loan amount, saving related matters, use of loan amount, women’s autonomy, change in women’s life) on dependent variable (women empowerment)

 

H1_: There is significant impact of all independent variables (loan amount, saving related matters, use of loan amount, women’s autonomy, change in women’s life) on dependent variable (women empowerment)

 

If we consider the value of the table, mean square is 4442.167 and F ratio is 490.194, while significant value is 0.00 which is less than 0.05 hence the null hypothesis is failed to accept and the research has to accept alternate hypothesis that there is significant impact of all independent variables on dependent variables.

Table 1.4 Analysis of Coefficients

Model	Unstandardized Coefficients		Standardized Coefficients	t	Sig.	Correlations	Correlations		Collinearity Statistics
	B	Std. Error	Beta			Zero-order	Partial	Part	Tolerance	VIF
(Constant)	1.903	0.722		2.635	0.009
CLP1	0.025	0.035	0.019	0.716	0.474	0.545	0.029	0.014	0.541	1.849
CSR1	0.106	0.038	0.074	2.797	0.005	0.551	0.111	0.055	0.551	1.815
CUL1	0.192	0.033	0.144	5.733	0.000	0.572	0.224	0.113	0.611	1.636
CAU1	0.898	0.031	0.731	28.510	0.000	0.856	0.753	0.561	0.589	1.696
a. Dependent Variable: CWL1

 

As researcher has derived, the autonomy is the most influential independent factor, considering the value of constant is 1.903.Here β₁ is 0.025 and it indicates that when one unit changes in loan procedure then 2.5 percent changes occurs in overall women empowerment. As far as the validity of model is concerned, the value of t is 0.716 and the significant value is 0.474 which is higher than 0.05, it means this factor has insignificant impact on women empowerment.

 

Here β2 is 0.106 and it indicates that when one unit changes in saving related matters then 10.6 percent changes occurs in overall women empowerment. The value of t is 2.797 and the significant value is 0.005 which is less than 0.05, it means null hypothesis is failed to accept and there is significantimpact of saving related matters on women empowerment.As in the table, partials and part value is 0.551, it is the effect of change in saving related matters suggests that almost 55 percent changes have occurred in the  women empowerment is because of overall change in saving related matters. Preferably the tolerance value should be less than or equal to 1 and the VIF (Variance Inflation Factor) should be less than or equal to 10 for the evaluations of the multi collinearity purposes. Here the tolerance value is 0.551 (which is less than 1) and VIF value is 1.815 (which is less than 10), it indicates that we don’t find any kind of the multi collinearity in the research.

 

Here β3 is 0.192 and it indicates that when one unit changes in use of loan amount then 19.2 percent changes occurs in overall women empowerment. The value of t is 5.733 and the significant value is 0.000 which is less than 0.05, it means null hypothesis is failed to accept and there is significant impact of loan amount on women empowerment. The partials and part value is 0.572, it is the effect of change in use of loan amount suggests that almost 61 percent changes have occurred in the  women empowerment is because of overall change in use of loan amount. Here the tolerance value is 0.611 (which is less than 1) and VIF value is 1.636 (which is less than 10), it indicates that we don’t find any kind of the multicollinearity in the research.

 

Here β4 is 0.898 and it indicates that when one unit changes in women’s autonomy then 89.8 percent changes occurs in overall women empowerment. The value of t is 28.514 and the significant value is 0.000 which is less than 0.05, it means null hypothesis is failed to accept and there is significant impact of women’s autonomy on women empowerment.As in the table, partials and part value is 0.856, it is the effect of change in women’s autonomy  suggests that almost 59 percent changes have occurred in the  women empowerment is because of overall change in women’s autonomy. Here the tolerance value is 0.589 (which is less than 1) and VIF value is 1.696 (which is less than 10), it indicates that we don’t find any kind of the multi collinearity in the research.

 

Y= a + β₁x₁ + β₂x₂ + β₃x₃ + €

 

Here y is overall changes in women’s empowerment. (Dependent variable)

a = intercept/constant = 1.903

β₁= the regressions coefficient of second independent variable, (positive changes on women empowerment because of overall positive changes in saving related matters) = 0.106

β₂= the regressions coefficient of third independent variable, (positive changes on women empowerment because of overall positive changes in use of loan amount) = 0.192

β₃= the regressions coefficient of forth independent variable, positive changes on women empowerment because of overall positive changes in women’s autonomy) = 0.898

X₁  = overall positive changes in saving related matters (Independent variable)

X₂= overall positive changes in use of loan amount (Independent variable)

X₃= overall positive changes in women’s autonomy (Independent variable)

€ = the error term.

 

Y= 1.903 + 0.106x₁+ 0.192x₂+ 0.898x_{3 +} €

 

 

Fig. 1.1 P Plot of Regression Standardized Residual

 

 

Fig. 1.2 Histogram

 

 

 

5.  CONCLUSION:

Relationship of different independent variables on the dependent variables that is women empowerment is studied with the support of correlation analysis and multiple regression model. It can be concluded from the above analysis that all the variables are internally correlated supported by the correlation of more than 0.5 value. The regression model suggests the highest impacting factor is women’s autonomy followed by the use of loan amount. It suggests that if women have autonomy to use the loan amount, it will support empowerment of the women most.

 

6. REFERENCES:

1.       Amin R., S. Becker and A. Bayes 1998, NGO-Promoted Microcredit Programmes and Women's Empowerment in Rural Bangladesh: Quantitative and Qualitative Evidence. The Journal of Developing Areas, Vol. 32, No. 2, Winter 1998, pp. 221-236.

2.       Arena, B. (Sat, Oct 1, 2011). MicroFinance – Current Status and Growing Concerns in India. avantgarde. Retrieved from http://www.iitk.ac.in/ime/MBA_IITK/avantgarde/?p=475

3.       Badatya, K., B. Wadavi and S. Ananthi (2006) “Microfinance for microenterprises: An impact evaluation study of Self Help Groups”, Evaluation Study Series, Andhra Pradesh 13.

4.       Brana S. (2013), “Microcredit: An Answer to the Gender Problem in Funding”, Small Business Economics, Vol. 40, pp. 87-100.

5.       Dichter T. 1999, Non-governmental Organisations (NGOs) in Microfinance: Past, Present and Future. Available from: www.esd.worldbank.org/html/esd/agr/sbp/end/ngo.htm (Accessed on: 05.06.18)

6.       Home page. (2018, July 15). Retrieved from www.sewa.org: http://www.sewa.org/

7.       Hashemi S.M., S.R. Schuler & A.P. Riley 1996, Rural Credit Programs and Women’s Empowerment in Bangladesh. World Development, Vol. 24, No 4, pp. 635-653.

8.       Hulme D. 1998, Impact Assessment Methodologies for Micro-Finance: A Review. IDS, Brighton.

9.       Johnson S. & B. Roglay 1997, Microfinance and Poverty Reduction. Oxfam, UK.

10.     Kabeer N. 1998, ‘Money Can’t Buy Me Love’? Re-evaluating Gender, Credit and Empowerment in Rural Bangladesh. IDS Discussion Paper, No 363.

11.     Katharine N. Rankin (2010) Governing development: neoliberalism, microcredit, and rational economic woman, Economy and Society, 30:1, 18-37, DOI: 10.1080/03085140020019070

12.     khandelwal, s. (2007). Financial Inclusion in India: A Theoretical Assessment. Research Journal of Commerce & Behavioral Science. Retrieved from https://www.theinternationaljournal.org/ojs/index.php?journal=rjcbs&page=article&op=view&path%5B%5D=3075

13.     Mayoux L 1998b, Women’s Empowerment and Micro-Finance Programmes: Approaches, Evidence and Ways Forward. DPP Working Paper No 41.

14.     microfinance-and-micro-loans. (2018, July 10). Retrieved from www.pbs.org: https://www.pbs.org/video/studio-12-microfinance-and-micro-loans/

15.     Rahman A. 1999, Micro-Credit Initiatives for Equitable and Sustainable Development: Who Pays? World Development, Vol. 27, No. 1, pp. 67-82.

16.     Verma R., M. R. (2012). Micro–finance – A Critical analysis of Rural India. International Seminar, (p. 23).

17.     Wright G.A.N. 1999, Examining the Impact of Microfinance Services – Increasing Income or Reducing Poverty. Small Enterprise Development, Vol. 10, No. 1, pp. 39-47.

 

 

 

Accepted on 20.09.2018            © A&V Publications All right reserved