Journal of Critical Reviews

ISSN- 2394-5125 Vol 7, Issue 7, 2020

EMPOWERING WOMEN THROUGH MICROFINANCE: EVIDENCE FROM UTTAR

PRADESH, INDIA
Dr. Kishore Kumar1
1Assistant Professor, Institute of Business Management, GLA University, Mathura, India. akishore001@gmail.com

Received: 14.02.2020 Revised: 18.03.2020 Accepted: 23.04.2020

Abstract
Microfinance initiatives play a crucial role in economic development, employment generation and women empowerment. The active
participation of women in Self Help Groups (SHGs) has a positive impact on their member’s empowerment. This paper is an attempt to
identify factors contributing to the empowerment of women through microfinance initiatives. This empirical analysis uses information
collected through structured questionnaire, selecting solely based on their capacity to explain the different dimensions of women
empowerment. Result of the study also provides more effective design for efficient microfinance initiatives among self-help group
members. After analysis, the factors most contributing to the empowerment of women SHG members emerged are; Political Engagement,
Mobility & independence, Economic benefits, Self confidence & Respect, relevance of education, Protest against social ills and Financial
planning & control.
Keywords: Empowering Women, Planning & Control, Economic Benefits.

© 2020 by Advance Scientific Research. This is an open-access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/)
DOI: http://dx.doi.org/10.31838/jcr.07.07.187

INTRODUCTION in living pattern of financially deprived poor women and

Self-help groups (SHGs) represent a unique move towards
financial access in India. It combines access to low cost
financially viable services with the self-management approach
and lead to progress of the women self help group members. Self-
help groups are developed through NGO’s (Non- Government
Organizations), Banks, and NBFC’s (non banking financial
compnaies). Participation of women in Self Help Groups (SHGs)
positively impact member’s empowerment, both in terms of
financial and community development. Normally SHGs consists
of 10 or more members drawn from a relatively same economic
background and self-selected based on their mutual trust and
affinity. These members meet on a regular basis in accordance
with the predetermined schedule to collect their savings and
pooling it into a common fund, which in turn used by members to
avail loans. The group develops its own set of laws, rules, and
sanctions for violations (delay in repayment of loan, delay in
savings). The goal of the SHGs is to break the barrier of just
saving and credit – and embrace the concept of progress of its
members in community, political sphere, intellectual circle and
financial life; thus, the SHGs can be said as “mutual-growth
institution” or credit plus institutions (Agarwal and Sinha, 2010).
The main objective of SHGs is that it provides freedom, promotes
trust, mutual faith and confidence among its members.
Microfinance initiatives like the Self Help Bank Linkage Program
(SH-BLP) has been increasingly promoted SHGs for their positive
economic impact and to achieve women empowerment.
Microfinance initiatives enable women to challenge the existing
societal outdated norms and to promote their financial
wellbeing. The most distinctive characteristic of microfinance
programme is that it focuses on women financial development
and empowerment. Majority of members are women in
microfinance programmes. The basic rationale of microfinance
initiative is to empower women by providing economical
assistance independently, so that women can contribute to their
households’ income through self-employment. This economic
independence though microfinance initiatives generate self-
belief, self-respect, self-worth and various other forms of
empowerment (Shukla and Sneha, 2012). The process of
development and empowerment of the SHG members is not
automatic, rather depends upon many factors i.e ability,
environment, initiative and status of women in society. Women
participation in SHGs has resulted in tremendous improvement
empowered them at various levels (Swain and Wallentin, 2009).
SHGs have not only empowered women’s at individual level but
also as a member of the household, and the community as a
whole (Amer and Moamenla., 2013). There is a growing body of
literature in the field of microfinance initiatives. Several
researchers have conducted studies on the notion of
microfinance, its strategy and role of microfinance initiatives.
However, empirical studies specifically aimed at identifying
factors contributing to women empowerment through
microfinance initiatives are limited. It is in this backdrop present
study aims the factors that contribute to women empowerment
through self-help groups.
REVIEW OF LITERATURE
The literature review has been organised as various researches
have been done to define microfinance, different perspective of
microfinance, factors that contribute to women empowerment
through microfinance initiatives. The review of the literature
provides an important insight in the present study.
Microfinance has been defined by many authors from
different perspectives
Agarwal and Sinha, (2010) noted that microfinance is the
provision of financial services to low-income poor and very
poor self-employed people”. These financial services generally
include savings and credit, it also include other services like
insurance and payment etc. (Bi and Pandey, 2011). Kaur
(2014) defined microfinance as a financial instrument like
borrowings, savings, advances, insurance and other basic
financial services. Microfinance facilitates the provisions for
small loans or finances (micro credit) to the people with no
financial access and helps them venture into in new productive
economic activities or to expand the existing ones (Singh et al.,
2014). Sandhu and Gurveen, 2013) noted that better access to
microfinance results in poverty alleviation, economic
empowerment financial sustainability, improved standard of
living and overall empowerment.
The review related to various factors for participation in
microfinance and benefits of forming up SHG
Anjugam and Ramasamy (2007), determined various factors
influencing women’s participation in the microfinance

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 EMPOWERING WOMEN THROUGH MICROFINANCE: EVIDENCE FROM UTTAR PRADESH, INDIA

programme in Tamil Nadu state of India and found that socially used to select the respondent. Total 188 respondents were
deprived, economically backward, landless households are interviewed and data was collected but only 151 questionnaires
more involved in microfinance programmes. Nalini et al. were found suitable for the purpose of analysis. The study was
(2013) found that women SHGs are performing better conducted in Ghaziabad District National Capital Region in India.
compared to men SHGs. The findings showed that all the The unit of analysis of the study were women from the self-help
women SHGs are meet frequently on weekly basis. The findings groups related to various microfinance institutions. Factor
also suggest that SHGs showed positive impact on women analysis was used for identifying factors that responsible for the
members in comparison to men members, in terms of loan financial and social empowerment of women through
borrowing, payment, loan usage, investment, consumption microfinance programs.
expenditure and economic empowerment. Kundu, (2016)
concluded that microfinance initiatives like the self help bank DATA ANALYSIS AND INTERPRETATION
linkage program have been promoted in India due to its Total of 151 questionnaires, were analysed and SPSS was used to
positive economic impact. The findings suggest SHG conduct Factor Analysis to identify the factors contributing to
participants have significant and higher empowerment and women empowerment. Descriptive analysis of the sample is
SHG programs of microfinance services positively contributes shown in table 1. The result of descriptive analysis indicated that
to financial change in household condition and empower majority of respondents (40.6) is between age group of 41 to 50
women. A study conducted by Kaur, (2014) on “Micro years, 37.7% lies between the age group of 31-40 years age
Financing through SHGs Empowering Women: In Indian group. Majority of respondents are also literate upto high school
Context” highlighted key motive to join SHGs by women. The which is 46.4%, whereas 22.5 % are illiterate, 17.9%
women become socially and financial empowered through respondents are literate upto 5th class and 13.2 % are literate
engaging with SHGs lead to self employment by engagement in upto graduation. This shows that self-help group entails member
economically productive activities (Tripathy and Umakanta, of different education level due to its inherent benefit of
2015). association. These members are also able to save money out of
their income, 23.2% women self help group members save more
Literature review related to factors contributing to women than Rs. 2000 per month, 27.8 % makes saving between 1500 to
empowerment through microfinance initiative are; Tehra 2000, 27.2% save between 1000 to 1500 rupees. Respondents
(2014), noted that with help of SHGs microfinance activities also varied in terms of their period of association with the self-
have successful in attaining their goals for self-employment, help group. Out of the 151 respondents 90 respondents have
women empowerment, income generating activities and been associated with the self help groups for more than 2 to 5
poverty alleviation. Study found that the SHGs are very years, 35 respondents have a period of membership of more than
beneficial for the Socio-Economic Development of BPL families 5 years whereas 36 members are associated for less than 2 years.
as well as low-income families. It is also found that with help of
microfinance many groups had started group business and • Demographic Profile of the Sample
personal work. Kheni et al., (2014) analysed the role of SHGs
rural empowerment inn Andhra Pradesh, India. The study Table 1
found that SHG microfinance activities successful to some Main Sub-categories Frequency %
extent to achieve social and financial empowerment through variables of variable percentage
facilitating better access to institutional finances. SHGs Age >30 years 19 12.6
positively impact members especially with respect to financial 31-40 years 57 37.7
and social empowerment. Thileepan and Soundararajan 41-50 years 61 40.4
(2014), found self -confidence, self-respect and freedom of 51 and above 14 9.3
women as imperative for socio-economic empowerment. Total 151 100
Developmental schemes and programmes of SHGs had created Education Illiterate 34 22.5
opportunities for women. An important factor for developing
Upto 5th class 27 17.9
status of women is economic independence of women,
Upto 10th 70 46.4
microfinance is not only important for providing the loan but
also helpful in skill development and education of women. Upto 20 13.2
graduation
RESEARCH OBJECTIVES Total 151 100
3.1 To understand women empowerment through microfinance Type of family Nuclear 79 52.3
initiatives. Joint 72 47.7
3.2 To identify the factors those contribute to empowerment of Total 151 100
women through self-help groups. Membership >2 36 23.8
period <2 to >5 90 59.6
RESEARCH METHODOLOGY <5 and above 35 16.6
1) Research Design Total 151 100
The study used an exploratory research design since this study is Monthly 0-500 7 4.6
centred on exploring various factors contributing to the saving
empowerment of women among SHG members. Data was 500-1000 26 17.2
collected through structured questionnaire. To conduct a pilot 1000-1500 41 27.2
study, questionnaire was given to the women SHG members. 1500-2000 42 27.8
Their feedback provided the new inputs, which were further More than 35 23.2
added in the questionnaire to bring the refined questionnaire. 2000
The entire research was aimed at determining the factors Total 151 100
contributing to the women empowerment among self-help group
members. 1) Factor Analysis
The main objective of this research was identifying the various
2) Sample Framework factors that affect the empowerment of women who have been
Survey instrument in the form of close-ended questionnaire and the part of microfinance initiatives through self-help groups. The
structured personal interview were developed for the purpose of factor analysis technique was used for data analysis. Factor
collecting data for the study. Convenience sampling method was

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 EMPOWERING WOMEN THROUGH MICROFINANCE: EVIDENCE FROM UTTAR PRADESH, INDIA

analysis is a procedure used for data reduction and
summarisation. This technique helps in identifying underlying
dimensions or factors that explain the co-relation among a set of
variables. Therefore, to categorize factors contributing to women
empowerment among self-help group members and to
determine the variance explained by each factor, an exploratory
factor analysis (EFA) was conducted. It will help in identifying
the underlying traits and factors contributing to the women
empowerment among SHG members.
2) Data Appropriateness & Sampling Adequacy
Data revealed that internal coherence of the data was
appropriate (KMO =0.607), as shown in Table. 2. Value of more
than 0.5 indicates application of factor analysis is appropriate.
Value below 0.5 implies that factor analysis may not be perfect
because of the sampling inadequacy. Bartlett’s test of Sphericity
is the test statistic used to examine that each variable
correlate with each other (r=1) but has no correlation with the
other variable. In our test, Bartlett’s test of sphericity (0.00)
provides good support for validity of data set. So it is desirable to
apply factor analysis.
Table 2
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .607
Bartlett's Test of Sphericity Approx. Chi-Square 653.274
Df 325
Sig. .000
3) Factor Analysis of the Variables Contributing to Women
Empowerment Among SHG’s
The Data on the 26 variables were analysed using the principle
component analysis method. The four commonly used decision
rules were applied to identify the factors (Hair et al, 2005): First,
Initial Eigen value greater than 1. Secondly, factor loading should
be of greater than of 0.5 for each variable. Third, simplicity of
factor structure; and fourth is exclusion of single item factors.
There were ten factors that their extracted Eigen values were
greater than one. Total variance explained by these ten factors is
61.628 as shown in Table.3. The scree plot (Table. 5), shows the
number of factors that can be obtained for the further analysis
from the point from where the slope of the curve is clearly
levelling off indicates the number of factors generated by the
analysis. Further, the items were categorized by using VARIMAX
Rotation Method (Table 6). In the factor analysis more
meaningful component can be extracted through axis rotation.
The decision to include the factors is used on the values of factor
loading. In this analysis we have used the Varimax orthogonal
rotation to get a factor structure in which each variable observed
highly on one factor. The higher the value of the variable loaded
the higher the probability of variable representing the factor. The
component structure represents each factor contributing to
women empowerment. Three components namely factor 6, 7 and
9 were found to be of single variable items that is why they were
not included as the factor contributing to the women
empowerment among self help group members.

Table 3
Total Variance Explained
Component Initial Eigenvalues Extraction Sums of Squared Rotation Sums of Squared Loadings
Loadings
Total % of Cumulative Total % of Cumulative Total % of Cumulative
Variance % Variance % Variance %
1 3.812 14.660 14.660 3.812 14.660 14.660 2.267 8.718 8.718
2 1.758 6.761 21.421 1.758 6.761 21.421 1.794 6.900 15.618
3 1.537 5.913 27.333 1.537 5.913 27.333 1.702 6.546 22.164
4 1.494 5.745 33.078 1.494 5.745 33.078 1.650 6.346 28.510
5 1.464 5.632 38.711 1.464 5.632 38.711 1.560 5.999 34.509
6 1.353 5.204 43.914 1.353 5.204 43.914 1.489 5.727 40.236
7 1.276 4.908 48.822 1.276 4.908 48.822 1.446 5.562 45.798
8 1.139 4.381 53.202 1.139 4.381 53.202 1.418 5.455 51.253
9 1.125 4.327 57.529 1.125 4.327 57.529 1.369 5.264 56.517
10 1.066 4.099 61.628 1.066 4.099 61.628 1.329 5.111 61.628
11 .987 3.797 65.426
12 .946 3.637 69.063
13 .903 3.474 72.537
14 .890 3.424 75.961
15 .772 2.968 78.929
16 .718 2.760 81.690
17 .640 2.463 84.152
18 .626 2.406 86.559
19 .586 2.255 88.814
20 .533 2.051 90.865
21 .524 2.016 92.880
22 .462 1.778 94.659

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 EMPOWERING WOMEN THROUGH MICROFINANCE: EVIDENCE FROM UTTAR PRADESH, INDIA

23 .420 1.616 96.275

24 .381 1.466 97.741
25 .303 1.165 98.905
26 .285 1.095 100.000
Extraction Method: Principal Component Analysis.

Table 4

Table 5
Rotated Component Matrixa
Component
1 2 3 4 5 6 7 8 9 10
Now I am more confident in meeting with officials and .694
representatives
I would like to associate with the political party .693
I vote independently in local election .645
I am more aware about the work done by MPs and MLAs .542
in my area
I feel free to move outside from home .675
I generally present my problems in Grampanchayat of my .528
area
I can take decision regarding toilet at home
I am now more capable to meet my household .625
requirements
I can borrow loan from banks on my own .621

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 EMPOWERING WOMEN THROUGH MICROFINANCE: EVIDENCE FROM UTTAR PRADESH, INDIA

I am free to make decision regarding investment of .605

savings
I am more independent than before .750
I can also participate in family business in future if .541
required
I am able to take decision on self-education .750
Now I am more determined to provide education to my .701
children’s
I am against dowry in any form
I am also able to enhance my social status .820
I am socially more active now
I am able to increase my saving .712
I can purchase daily utilities without permission of my
husband
I am free to purchase my clothes when it is necessary
I protest against child labour .613
I do raise voice against domestic violence in any form .597
I don’t tolerate alcohol abuses by husband at home now .556
I wish to participate in local election in future .889
I take decision in family budget planning .664
I have spent money on purchase of home utensils .619
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 16 iterations.

DISCUSSION fact, the driver to initiate the study is to understand how far
The study is aimed at identifying factors women empowerment microfinance can empower women. Seven factors emerged out in
of SHG members engaged in the microfinance programs. In the study and they have titled as follows;

Table 6: Rotated Component Matrix for the Factors Contributing to Women Empowerment among SHG’s Member
Factors Variables Factor loading
for variables
Political Now I am more confident in meeting with officials and representatives. 0.694
Engagement I would like to associate with the political party. 0.693
I vote independently in local election. 0.645
I am more aware about the MPs and MLAs in my area and the work done by them. 0.542
Mobility & Independence I feel free to move outside from home. 0.675
I generally present my problems in Gram Panchayat of my area. 0.528
Economic benefits I am now more capable to meet my household requirements. 0.625
I can borrow loan from banks on my own. 0.621
I am free to make decision regarding investment of savings. 0.605
Self Confidence & Respect I am more independent than before. 0.750
I can also participate in family business in future if required. 0.541
Relevance of education I am able to take decision on self-education. 0.750
Now I am more determined to provide education to my children’s 0.701
Protest against Social ills I protest against child labour. 0.613
I do raise voice against domestic violence at home in any form. 0.597
I don’t tolerate alcohol abuses by husband at home now. 0.556
Financial Planning & Control I take decision in family budget planning. 0.664
I have spent money on purchase of home utensils. 0.619

First factor, which is Political Engagement, is combination of
three variables, which are women are more confident in meeting
with officials and representatives, voting independently in local
election, wish to associate with political party and are more
aware about the MPs and MLAs in my area and the work done by
them. Hence they make up an important ingredient for their
vivid & growing political engagement which signifies that
microfinance initiatives has resulted in political empowerment of
women’s of self help group members. The second factor is
Mobility & Independence indicator, which can be broken down
to variables that are freedom to move outside of home and
reaching out to local Gram Panchayat to put forward their
problems. This factor shows that women’s are now free to
express and do things outside of their home contributing to
social empowerment of women. SHG members are able to meet
their household requirement, borrow loan by their own, and are
free to make decisions regarding the investment of their savings,
explains the fact that women’s are now economically
independent. Hence, the third factor is named as Economic
benefits contributing to the economic empowerment of them.
Self Confidence & Respect is the fourth factor derived from the
variable like women now are more independent than before and
can participate in family business if required. Relevance of
education is the fifth factor which seems to have important
bearing on the women empowerment. It comprises the variable
like women are taking decisions of self education and also
recognising the need for imparting best education to children’s.
Sixth factor can be inferred as Protest against social iIl, as
association with the self-help groups has also resulted in growing
awareness about their right and social ill prevailing in the
society. To extent women’s now protest against these kinds of

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 EMPOWERING WOMEN THROUGH MICROFINANCE: EVIDENCE FROM UTTAR PRADESH, INDIA
social ill like child labour, dowry, domestic violence etc. Seventh
factor is financial planning & control, which is complementing
the second factor; is inferred from the variables like freedom and
control over decision to make purchase of home utensils and
they also actively plan their financial budget, hence contributing
to the economic empowerment of women in Self help groups.
CONCLUSION
The paper attempts to clarify the existing debate about the
various factors that contribute to women empowerment through
various microfinance initiatives. It is found that most of the
beneficiaries belong to middle age group and have basic school
education. The review of previous studies also demonstrates the
relevance of micro finance programs in women empowerment. It
has been found out in this empirical research that political
engagement, mobility & freedom, economic independence, self
confidence & respect, education relevancy, protest against social
ills and financial planning & control are the most important
factors contributing to the women empowerment. Self
confidence & respect has engaged as a contributor of two
variables: Women are more independent than before and have
freedom to participate in their family business if required, clearly
indicates the empowerment of women. These two issues where
the respondents feel that they are more independent than before
and they can take decision in their family emerged as strong
indicators of women empowerment. Other factor through very
important could be taking a lead from these two. The other
factors group represent economic, social and political
empowerment through these views. In our opinion micro finance
initiatives should be directed towards providing major thrust to
these factors. The Self-help group formation through
microfinance initiatives has provided opportunities to women to
become aware about their rights of equality in the society and
participates in the different activities to generate earnings and
providing self-employment.
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