Microcredit and Women's Empowerment: Have We Been Looking at the Wrong Indicators?

The impact that microcredit has on women's empowerment has been much debated in the literature. Some studies find negative effects; some find positive effects and others no effect. A reconciliation of these discrepancies has been attempted by attributing them to the usage of different measures of empowerment. In particular, it has been argued that those studies that view empowerment as outcomes for women associated with their access to loans, find positive effects, and those studies that focus on processes of loan use find negative effects. These different ways of measuring empowerment are the focus of this study. Using data collected from 397 women participants in a microcredit programme in rural India, it is evident that measuring empowerment in terms of outcomes alone-as most impact assessments do-is not only insufficient but can actually be misleading as well. The findings of this study suggest that a more robust understanding of the linkages between lending to women and their empowerment can be achieved by focusing on the processes surrounding loan use and repayment. The findings of this study also caution against the excessive focus on outcomes as a measure of women's empowerment.