Benefits and Criticisms of Micro-Finance and Micro-Credit

Benefits and Criticisms of Micro-Finance and Micro-Credit


There are many benefits attributed to the supply of micro-credit facilities for women. The most dominant statement of micro-credit proponents is the’ emancipation’ of women through the availability of means of economic self-sufficiency. There have been success reports of micro-credit finance providers starting up their own enterprises and raising enough cash to cover their loans while retaining their small company. There are observational research confirming the finding that women who receive their own income prefer to funnel this income through household consumption spending (Johnson, 2005). In addition, the prevalence of group-based distribution systems has supported the belief that the provision of micro-credit services has had a positive effect on women’s lives, both personally and collectively. Empowerment was more generally calculated in this respect in terms of eight indicators: economic contribution of women to household income; women’s independence or desire to fly without escorts; capacity to make small purchases; ability to make major purchases; financial resources ownership; interest in small purchases; decision-making; independence from dominance of the family; and political consciousness (Hashemi, et al., 1996).

On the topic of consequences, Chen (1997) was one of the first to use this approach to identify three avenues to enable its clientele to create micro-credit programmes. The neural, the visual, and the emotional impacts are known as the three pathways. The cognitive effect measures the distance over which, thanks to their involvement in the course, the abilities and understanding of the learners have increased. Awareness on how to invest, prepare for the future and take better care of personal and household finances is among these. Which also involves learning how to bank sales, learning the virtues of entrepreneurship and diligent work, commitment and strong-mindedness; money management and bank rolling profits; and learning how to take advantage of small business dynamics’ seasonality, diversification, and high inventory turnover.

Benefits and Criticisms of Micro-Finance and Micro-Credit

The second is the influence of thought, which focuses around how women see themselves. The self-confidence, self-reliance, and self-esteem of women, as well as their evolving view of their future as a consequence of it, are included here. Finally, the third direction is the emotional effect, or how the curriculum has altered the participants in terms of their family relationships (Johnson, 2005). The primary aspect of these partnerships is the bond between the participants and their partners. Two divergent mechanisms occur. One is the initial scepticism of the husband regarding the comings and goings of the wife, which is later substituted by an appreciative acknowledgment of her new talents, a higher degree of esteem given to her, and their acceptance of the contribution of the woman to the household profits. There have been instances, though, of husbands voicing indignation towards their spouses for taking so much time away from their household responsibilities, centred on the society in which the pair are rooted (Johnson, 2005).

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