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How microfinance helps reduce gender inequalities in the developing world

It doesn’t mean that men and women are equal, but rather that the desires, priorities, and needs of men and women must be considered when recognizing diversity among different groups.

Although the world has made advancements toward gender equality through the United Nations’ Millennium Development Goals gir, ls, women are still subject to violence and discrimination in many regions of the world.

Consider the education of girls for instance, only 74 girls were in school for 100 boys in the year 1990 in the southern part of Asia. In 2012, enrollment levels that were the same.

Girls are also faced with barriers to being admitted to secondary and primary schools in sub-Saharan Africa, Oceania, and the western part of Asia. Education disadvantages can lead to the lack of knowledge and a lack of opportunities on the job market. In northern Africa, as an example, women have just one of five jobs that are paid for non-agricultural industry.

Microfinance and gender inequalities

Microfinance has gained its acclaim and recognition in part from Mohammad Yunus, who began to explore loans to women who were poor in the town in Jobra, Bangladesh, during his time as an economics professor in Chittagong University, in the 1970s. In 2006, Yunus received the Nobel Peace prize for developing the concept of microfinance and for founding the Grameen Bank in 1983.

Since then, a variety of types of microfinance programs have been launched in various countries.

Mohammad Yunus created microfinance by testing lending to low-income women from Bangladesh. Eric Thayer/Reuters

The general rule is that the term “microfinance” is the process of providing small loans to the vulnerable, in conjunction alongside other services, such as savings facilities or training, health services as well as networking and peer assistance. This allows individuals to take on entrepreneurial ventures that earn extra money and help them better feed their families as well as themselves.

The past 30 years have demonstrated that microfinance is an established development instrument that is able to provide many of the less fortunate, especially females, sustainable and tailored financial services that improve their standard of living.

According to the Microcredit Summit Campaign Report for 2015, Microfinance institutions of 3,098 had served more than 211 million clients in 2013, with 114 million of whom lived in extreme poverty. Of the most vulnerable clients, 82.6%, or more than 94 million, were women.

In theory, microfinance allows women in need to participate in income-generating opportunities that aid women to become financially self-sufficient by enhancing their decision-making capacity within the family and society. Through this avenue econ, economists believe that microfinance can decrease gender inequalities.

However, research on microeconomics at the level of community-based countries across the globe also supports and challenges this assumption. In light of this inconsistent evidence, an approach to macroeconomics that draws the data of many nations together could provide a more complete view.

The evidence from all over the world

The study employs data from 64 countries in the developing world in the years 2003-2014 to analyze general trends across the globe as well as patterns in gender inequalities and microfinance.

The measurement of gender inequality comes using two indicators that the UN provides: the Gender Development-related Index (GDI) and the Gender Inequality Index (GII). They are composite indexes that are based on the results of a study that measures variations in health, education, levels of living, empowerment, and economic standing.

The primary variable that is important in our study is a measure of gender-based microfinance, that is, the proportion of female customers in proportion to the entire population of the nation. This measure was constructed using microfinance statistics taken from MIX Market, an auditing firm for microfinance. Firm.

Girls face challenges in gaining entry into primary and secondary schools in sub-Saharan African countries, Oceania, and the western part of Asia. Siegfried Modola/Reuters

We discovered an evidence-based negative connection between the microfinance participation of women and gender inequalities. Also, we found that gender inequality could be reduced when women’s participation is increased. As we’ve mentioned, in the average country in the developing world, increasing the amount of microfinance by approximately 15% is correlated with a decrease in gender inequality by around half.

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Jane S. King

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