Estefania Santacreu-Vasut, ESSEC Business School, uses her research to shed light on claims that microfinancing over-emphasises support to women.   

Microfinance targeting women: Too much of a good thing? by Estefania Santacreu-Vasut from the research paper by Drori, I., Manos, R., Santacreu-Vasut, E. & Shoham, A. (2019) “How does the global microfinance industry determine its targeting strategy across cultures with differing gender values?” Journal of World Business.

Micro-finance institutions have recently been blamed for “over-emphasizing” women as their main clients, disregarding other disadvantaged populations. Is this so?

To answer this question, we first need to define what over-emphasis means in this context. Does it mean providing loans to women who are relatively better off than other segments of the population but who nonetheless receive loans because they are women? Does it mean disregarding the local culture and adopting a universal approach that seeks to increase women’s financial inclusion regardless of initial conditions? Or then again, does it mean serving women in cultures where they are culturally well integrated and avoiding challenging local gender norms in cultures where they are traditionally excluded?

Women are in the DNA of microfinance

The historical development of micro-finance institutions means that targeting women has become part of micro-finance organisational identity. The orientation towards women is rooted in pioneer micro-finance organisations that, at inception (in the 1970s), outreached to women as their main social goal. By giving out small loans to poor women who lacked collateral, Grameen Bank founder, Mohammed Yunus, wanted to counter an unfavourable culture towards women, or as stated in the organisation’s website – to counter the negative consequences for women and for society from the fact that “Women in Bangladesh are neglected by society”. *

Today, the micro-finance revolution has spread well beyond its initial frontiers as it is now present worldwide. It has therefore evolved into various institutional and cultural environments, where women’s relative position varies. Internally, the micro-finance industry has adopted new organisational forms, moving from the traditional NGO-form to for-profit and hybrid forms with a dual mission (combining a social goal with sustainability constraints).

The varied environments in which micro-finance operates, as well as the heterogeneous organisational forms it has adopted, indeed make it possible that micro-finance “over-emphasizes” women. This could be the case if micro-finance organisations disregard their different cultural environments and stick to their historical identity to target women. Moreover, micro-finance may be over-emphasizing women as their target population in cultures where gender inequality is not – or less so – at the root of poverty and social exclusion.

Language unlocks

In recent research (Drori et al. 2019), my co-authors and I have explored this issue. As such, we studied the extent to which the local culture in which a micro-finance organisation operates influences the choice of defining women as the key target population. To capture local cultures that are detrimental to female economic independence, we use a linguistic measure that has been shown to correlate with gender inequality. In particular, we use the extent to which a language forces speakers to make gender distinctions in its grammatical rules.

Gender marking in language has been shown, in previous research by our research team and also by other scholars, to positively correlate with traditional gender roles, including an unbalanced sharing of household labour, even among couples where both partners work. It has also been shown to correlate negatively with female political representation and female labour force participation. Are those cultures where language is more likely to code female-male distinctions in its language grammar also more likely to exclude women from access to mainstream finance?

We use data on women’s access to traditional banking services to test whether this is the case. That is, whether women living in cultures that are more averse to women economic empowerment, as captured by language, are also more likely to face barriers to finance – and are less likely to hold a bank account, for example. We find that this is indeed the case. And it leads us to ask the following question: is micro-finance fulfilling the role of outreaching women particularly in those discriminatory environments and therefore countering the local culture? In other words, is micro-finance strategy universal or contingent on local needs and constraints? And if contingent, is it leaning against the wind by challenging local gender norms or, instead, is it adapting to them?

Microfinance targets those who needs it most

Our empirical analysis shows that the targeting strategy of micro-finance organisations is not universal but instead contingent on the local culture. More importantly, we find that micro-finance organisations are more likely to target women in countries where women face higher barriers to financial access. This implies that micro-finance organisations do lean against the wind and, therefore, that the micro-finance industry is pursuing a strategy to outreach women especially in countries where this is most socially needed, rather than in countries where it is most feasible or acceptable to do so.

More broadly, our findings suggest that one cannot say that micro-finance over-emphasizes women unless this claim is defined in relation to the local culture and the local needs.  Social outcomes are to be measured in relative terms to what cultural institutions define as acceptable or possible, and to the constraints they impose on the various players. As a result, the social consequences of organisations with a social mission should also be defined in relation to the extent to which the social challenges they handle are more or less severe –  for example, the extent to which women face gender discrimination in society at large.

What enables these organisations to pursue these adaptative and disruptive strategies? In future work we hope to shed light on this question to further understand how socially oriented organisations are successful by not only adapting to local conditions but also – and most importantly – by contributing to positively change the environment in which they operate.

* http://www.grameen-info.org/faq/

Useful links:

• Discover Estefania Santacreu-Vasut’s new book The Nature of Goods and the Goods of Nature: Why anti-globalisation is not the answer

• Follow Prof. Santacreu-Vasut on Twitter @s_vasut and her research on Gender & Finance with @ProfLongin @GenderFinance 
• Discover ESSEC Business School and its Global BBA, Master’s, Global MBA and EMBA programmes
• Download this article and others in Global Voice magazine #9, special Europe focus.

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