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Microfinance and Female Empowerment

Cahier de Reserche Working Paper No. 06-03

28 Pages Posted: 8 Feb 2006  

Sylvain Dessy

Laval University - Département d'Économique

Jacques Ewoudou

University of Montreal

Date Written: January 2006

Abstract

In the informal economy of developing countries, female entrepreneurs face a comparative disadvantage for operating high-productivity activities, owing to the prevalence of patriarchal forms of business regulations. Yet, for microfinance institutions (MFIs) to succeed in enhancing female empowerment, increased access to credit must enable female entrepreneurs to tap into the range of high-productivity activities. So when the costs of legality are too high in developing countries, and the informal economy becomes the only affordable venue for operating a business venture, this paper shows that access to microfinance services becomes only necessary, but not sufficient for female empowerment. Based upon a game-theoretic model of activity choices by ex ante homogenous women, we argue that conditioning well-trained women's access to credit to the adoption of high-productivity activities may enable MFIs to induce the emergence of networks of female entrepreneurs large enough to mitigate patriarchal practices that raise the costs of operating such activities in the informal economy.

Keywords: Microfinance, female entrepreneurship, supermodular games

JEL Classification: D13, J16

Suggested Citation

Dessy, Sylvain and Ewoudou, Jacques, Microfinance and Female Empowerment (January 2006). Cahier de Reserche Working Paper No. 06-03. Available at SSRN: https://ssrn.com/abstract=881766 or http://dx.doi.org/10.2139/ssrn.881766

Sylvain Dessy (Contact Author)

Laval University - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada

Jacques Ewoudou

University of Montreal ( email )

C.P. 6128, succursale Centre-Ville
Montreal, Quebec H3C 3J7
Canada

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