The impact of a rural microcredit and financial inclusion schemes targeting women on household vulnerability and economic empowerment: evidence from South West Nigeria

The rapid expansion of microcredit in recent years is informed by the belief that removal of constraints to credit access facing the poor, particularly women, through microcredit can improve their well-being and ultimately help them out of poverty. However, the evidence supporting these promises has been largely inconclusive. This study examined the impact of a rural microcredit scheme targeting women on vulnerability and empowerment of the beneficiaries and their household members. The study was conducted in collaboration with the Amoye Microfinance Bank, Ikere Ekiti, Nigeria. Data was collected from a follow-up survey of 2,938 applicants, comprising 1,555 women who were successful (treated group) and 1,383 women who were unsuccessful (control group), and 8,418 household members. Eligibility for the microcredit was based on a credit scoring system. A regression discontinuity design was adopted to exploit the information around the eligibility threshold to identify the program impact. Vulnerability and empowerment were measured from five domains. The results showed that beneficiaries of the microcredit were significantly less vulnerable than non-beneficiaries, but not all of the measurement domains were significant. Also, beneficiaries were significantly more empowered than non-beneficiaries, and all of the measurement domains were significant. Additionally, indicators of labour market participation were significantly higher for household members of beneficiaries than for household members of non-beneficiaries. The analysis extended to examining associations between the estimated impacts and some institutional factors such as pricing, repayment method, loan duration and use of loan. The results suggest that these factors are potentially relevant for the aspect of design of microcredit schemes. The findings further inform the policy debate on the promises of microfinance, specifically relating to the multidimensional nature of the impacts, effects on family members of beneficiaries, and the relevance of institutional factors for microcredit design.