Evaluation of Microfinance and Women Empowerment: Case Study on Grameen Bank in Northern Bangladesh Essay

Evaluation of microfinance and women empowerment: Case study on Grameen Bank in Northern Bangladesh Chapter One: Overview Where there is informal economy condition of developing countries, women face a comparative disadvantage. In the northern area of Bangladesh, economic conditions forced rural women to adopt microfinance (credit and savings) as one major strategy for self reliance. Women go through relatively much more hardship than men in countries that are striving towards economic growth to compete with developed countries.

Microfinance has been a proven successful vehicle for self-reliance of women in the northern poverty-ridden country areas of Bangladesh, where women are almost forced to adopt to this particular financial strategy due to their poor economic conditions. The principle of microfinance or microcredit is to provide bank and credit services to those otherwise are not eligible to get credit or finance because of their financial condition being way below the poverty level.

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So, in the context of normal banking and financial world where people with such financial liability and risk may be considered burdensome some the total economy, the concept of microfinance is truly innovative for so-called third-world developing nations. In those economies, with almost no substantial source of income and lack of credit history, women are furthermore ineligible for credit or loan. Therefore, women in countries like that fail to reach any financial strength due to their ineligibility to obtain modern banking or financial services. In this dark area of economy, Professor Dr.

Mouhammad Yunus shed some light of hope by successfully implementing this truly innovative idea of microfinance. Objectives: * To measure the effects of microfinancial services on rural women. * By the way of analyzing the literature on microfinance and women empowerment. * To find out the beneficiaries and the benefits of microfinance. * To find out the evidence of women empowerment emanating from the provision of micro-finance. * To find out the issues or problems customers are facing in the provision of microfinance. * To find out how to improve micro financing to solve poverty among rural women.

Questions: * What are the awareness levels of microfinance products among the targeted population? * What are the effects on micro financial services? * What are the evidence of women empowerment in targeted area? * What does the concept of microfinance entail? * What is the role of microfinance? * What are the benefits of microfinance / microcredit? * Who are the beneficiaries from microfinance? * What is the process of getting a microcredit from Grameen bank? * What problems customers are facing when they are applying for microcredit? What is the impact of microfinance on its customers? * Does microfinance helps poor people to come out from the curse of poverty? * How to improve micro financing to make it easier to reach people who actually can exploit this to improve their lives? Motivation: The researcher have chosen this topic because he thinks he really do like the concept of micro finance. He does have a lot of interest in micro financing. This is a unique, easiest and most effective way to reach and help people who are actually suffering from the curse of poverty.

With the help of micro finance they actually can come out of from that curse. He wants to build his career in investment bank or banking sector. And his belief is micro financing is profitable as well. As we all know that most of the commercial banks in Bangladesh still didn’t launch microcredit as one of their normal running products. By and of this research he thinks that he will find out most of the aspect of micro finance and can approach this to any commercial bank in Bangladesh to encourage them to micro financing from which they can make profit as well.

Research context: In the beginning of Grameen Bank Professor Muhammad Yunus introduce a research project in 1976 for the poor people. The project accentuated with the light of following results:                                    o     Bring unbankable men and women under banking ability. o       Terminate the high interest money lenders who exploites the poor. o       With Encourage, direction and training construct new self employment opportunities for the poor and unskilled persons in Bangladesh. To find the disadvantaged, the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves  and reverse the age-old vicious circle of “low income, low saving & low investment”, into virtuous circle of “low income, injection of credit, investment, more income, more savings, more investment, more income”. In the early days, when microfinance was first introduced between 1976 and 1979, the action research effectively demonstrated its positive impact in the village of Jobra and its vicinity.

In 1979, the project extended its reach to Tangail, a district north of capital city Dhaka, with help and sponsorship of the central bank and other major nationalized banks. After consecutive better than predicted results, by October of 1983, the Grameen Bank Project had grown to an independent bank itself through government legislation. With only 10% its share owned by the government, currently, Grameen Bank is mostly owned by borrowers, the rural poor whom it serves, with 90% of its share . Chapter 2 Literature Review: 2. The Research Concept Schreiner shows in the year 2000 that microfinance is a term to improve the poor person through the light of saving and services loans. That microfinance introduces as a social innovator in the year 1970. The general credit for microfinance is a micro loan which is less then $100. that type of small loan is enough for hard worker to raise their business. Micro credit function is one of the expression of microfinance. 2. 2 Importance: The importance of microfinance is to help the poor people to settle their business.

It can make possible to change the meaning of poverty by using the tools of self employment. It’s been said that the microfinance can help poor to establish their personal business. It changes the view of poverty by using self employment as a tool. It plays a very vital role and go towards the financial service to make it positive despite different levels of poverty with various dimension. The micro credit function develops the business participants those, emphasis on basic necessities of lower working class like education, food, health, lifestyle etc. ust because of earning maximum profit. The profit of microfinance helps to escape those people from susceptibility like wage slave virus, theft, and natural disaster and other climate events. Microfinance History: According to Robinson (2001) and Otero (1999) the term microcredit and microfinance is introduces in the year 1970 as a new term in the arena of financial development among the poor. But we see from 1950’s to 1970’s there was subsidized rural credit programme by donors and governments that was in fact found in high loses (Robinson, 2001).

In the analysis of Robinson that the 1980’s represented a turning point in the history of microfinance in that MFIs such as Grameen Bank began to show that they can provide small loans and savings services profitably on a large scale. By the opinion Mix, 2005 the term microcredit comes on light in the importance of development that Grameen Bank rightly shows the sustainability of microcredit function. In the year 1990, it is accentuated that the growth of microfinance institutions catch the respective goals which is described by Robinson, 2001, p. 54, Dichter 1999, p. 12. According to Robinson microcredit is now an established industry. . 4 Microfinance models: Microfinance interventions Mix identify that microfinance offers financial services for the poor people (Mix,2005). According to UNCDF 2004 report, there are approximately 10000 MFIs in the world that deals with 4% of potential clients, about 30 million people. In the year 2000 Grameen Bank has identify fourteen different models on microfinance. Here I will emphasis on three out of 14 different models: Rotating savings and credit association (ROSCAs), the Grameen Bank and the village Banking models. * (ROSCAs) Rotating savings and credit associations:

By this model a common fund will arranged by the contribution of the group of people which is handover to a member of that group (Grameen Bank, 2000). ROSCAs model is a common mode of savings and credit (Harper, 2002). Fisher and Sriram states rightly in 2002 ‘merry grounds or self help group’ about this model where all the members of this group are very close relation like friend or neighbours or social interaction means closely related with women. The Grameen Solidarity Group Model: In this model loans are given to individuals in groups of four to seven (Berenbach and Guzman, 1994).

Ledgerwood shows 1999 that this model payments are made weekly basis and group members are collectively ensure the payment of the loan and access to subsequent loans which is dependent on the successful payment by the group members. * Village Banking Model: It is also the model of credit and savings which is under nursing by the NGOs. Hold rightly said in 1994 that village banking ensure financial services to build community self help groups. By the way the bank run by the members, it’s the member who elects their officers, establish their own bylaws, distribute loans to individuals and collect payments (Grameen Bank. 000a). 2. 5 Academic debate in the function of microcredit and women empowerment: In an academic focus it is accentuated that microfinance holds a vital role to play in growth according to proponents of microfinance. In the year 2004 UNCDF shows that microfinance has three key roles for the development. These are as follows: * Helping very poor households who are not able to meet their basic requirements and not able to protect themselves from risks. * It is related with the developments in household economic welfare. * It is runs for empower women.

All that Otero shows in 1999 that microfinance is not only about providing capital to the poor to fight with poverty on an individual level but also a role of an institutional level that takes financial services to the poor. 2. 6. 1 Related literature review on research objectives: The project of microfinance for women empowerment is reviewed by many changes and income level development. Kabeer (2003, p. 106) shows that the wider social effect is valuable for an organisation’s internal learning process, as an MFI should be aware of the “full range of changes associated with its efforts and uses these to develop its performance”.

On the other hand, Kabeer go into the individual or household study or to notify that analysis should also be organized at community, market/economy and national/state levels (2003,p106). 2. 6. 2 Empowering women: Women empowerment is one of the key objectives of many microfinance interventions. Kabeer, quoted in Mosedale (2003, p. 2) states that women require empowerment as they are forced by “the norms, beliefs, customs and values through which societies differentiate between women and men”.

On the other hand MFIs insist to empower women indirectly through awareness programme to challenge the existing norms, custom and cultures which keep them at the level of disadvantage, training, and motivation. Here I have reviewed briefly the evolution of microfinance and women empowerment and three MFI models that is involve in the function of micro credit. MFI’s main view is for economic development and kick out the poverty in the light of micro credit function. For more accentuate the need for microfinance MFI carefully designs services that meet the real need of the poor people. Chapter 3

Research Methodology: This chapter shows how the research questions will be answered taking into consideration conceptual, reliability and validity issues. It begins with the explanation of the project that research go forward through the way of various questions and answers. First of all the research shows the reconnaissance study and the identification of research units and then go forward to collect data and analyze in a theoretical frame in the phases two and three and then ends with the light of approaches which is most important. For living underline of poverty and no income source, women are ot bankable and not belonging any credit history. By this simple and clear reason women are unable to come close to a minimum requirement for an ordinary credit of as usual banking. Research Methodology: Research is about discovering new ideas, actively thinking about and working with them. We may use existing information, but should draw our own conclusions, synthesize and integrate our own original ideas into the finished product. Now micro financing is not only strict to the advancing credit to the poor but also extend to the saving, insurance and remittance.

A poor person can save his limited earnings and also want to reduce vulnerability so the micro financing provide him/her the facility to be insured. So the microfinance calls for impact that is accounting for value for money in terms of returns to investments made through the benefits beneficiaries gained. WMI method will be followed to do main part of analysis of this study. Empowerment of the respondents is followed by the method of WMI. Weighted Mean Index : WMI= f1 ?? W1+ f2 ?? W2 + ……….. + fn ?? Wn/ O (f1……. fn) Here, W1 ……… Wn = respective weightage of the variable 1…………. fn = respective frequency It is also noted that the wait for every variables was assigned subjectively. The Research onion : the researcher is going to follow this research onion to conduct this research. Source: Mark Saunders, Philip Lewis and Adrian Thornhill 2006 Saunders, Lewis and Thornhill, Research Methods in Business, 4th Edition. Pearson Education Limited 2007. 3. 1: Research Philosophy: In the time of research researchers must need to keep in mind what research philosophy has to follow. It is also called scientific ideal and deals with the methodology.

The final goal of the research philosophy accentuated what ideal researchers have followed according to their findings and which aspect suits best to their study. There are two types of leading research philosophy interpretivism and positivism. These two ideals are totally different to each other. On the other hand Saunders et al. shows the research process which lead the literature to positivism, Interpretivism, and Realism. Positivism: The term Positivism ideals deal with objectivity that shows the social world properties should not be incidental subjectively but it calculated towards the objective methods.

All that the positivistic model tries to reproduce the reality. Researcher will go to accept the philosophical attitude on natural scientist when the research philosophy reflects the philosophy of positivism. Generally the researchers observe and collect the fact to catch the important goal. Finally the positivism makes possible the patterns and regularities to identify the goal. Interpretivism: The model of Interpretivism is an epistemology that advocates the importance for the researcher to understand differences between humans, in the role as a social actor.

It shows the differences between ongoing research among people rather than objects such as trucks and computers. Here human being are observed in the way of subjectively. Interpretivism means ‘a theoretical point of view that advocates the study of direct experience taken at face value, and one who sees behavior as determined by the phenomena of experience rather than by external, objective and physically describe reality. Realism: The model realism is an epistemological position which relates to scientific enquiry. The core thing of realism shows the senses of truth that is in the human mind as an object.

All that realism means a true which is independent human mind. This above discussion makes me free to think to stand between the Positivist and Interpretivist researcher. My main goal is not only to find out the Evaluation of microfinance and women empowerment in the northern part of Bangladesh that helps the poor people to come over the poverty. Therefore, in this sense, the research is not only working on the subject, but also the object. It is also consider that this research will neither be Positivist nor Interpretivist.

This research will be between these two kinds of research philosophies. 3. 2: Research Approach: Many more analysis ensure the impact of micro credit programs outline for income generating that also shows a positive impact to the income, wealth and asset accumulation and on individual outcomes. The main view of micro credit function is to generate income that hold up poor for self reliant and encouraged women to involve in productive activities. Micro Credit function assists to empower women by making sure economic decision. The word empower means to give lawful power or authority to act.

In the year 2002 World Bank rightly shows about empowerment that means the expansion of assets and capabilities of poor people to participate in, control, influence, negotiate and hold accountable institutions. NGOs are working now a days for women empowerment especially who are the poor women. There are three major indicators for empowerment. These are as follows: participation in household decision making, control over income and access to assets have been taken into consideration to assess overall subject. For each of the guide a WMI has been constructed, and finally a collective WMI is ensure to look at the overall situation.

Hereunder, the extent of change in each indicator of empowerment (considered in this study) has been highlighted. There are two types of research approaches. * Inductive * Deductive. Inductive approach Inductive approach shows that researchers begin their working with the experimental observation. For more accentuate researchers show hypotheses to build up Inductive approach accentuates on indication and stays very close to practical data. All that, an indicative approach shows to develop new theories, which are then used to elaborate general statements, that is coming from empirical observations.

Creswell (1994) has suggested number of practical principles to set between the deductive and the inductive approach. May be the most major principle is the nature of topic of research. That is, a topic which there is a wealth of literature from which one can define a theoretical framework and a hypothesis leads itself more readily to deduction. Deductive approach: Deductive approach act when researchers generate hypothesis from theory then they use empirical research and data collection to test the hypothesis. Conclusions come from the evidences in the deductive approach. The conclusions are true when the evidences are right and reliable.

Graziano et al. mentioned that the deductive approach emphasizes on deductions from constructs. The deductions are started as hypotheses and then empirically tested for the research. Deductive approach is commonly used when a positivistic ideal is taken. Here the researcher uses the theory to make assumptions form the objective point of view. My research goes into the light of investigate, the research questions which based on empirical research and primary data. In addition, in this research, I will generate hypotheses form theories and then I will use empirical research and primary data to test the hypotheses.

In the time of conclusion need to apply logic. Therefore based on research question and scientific ideal. So, I chose to go by the deductive approach. 3. 3: Research Strategies: Research strategy is a preparation of an action plan which shows us the path to our hard work, helps us to accomplish research methodically rather than arbitrarily. An action plan can help us to keep purposeful, it can ease our aggravation. It can improve the superiority of our research and save us time sooner or later. Broadly speaking, there are two types of research methodology: qualitative and quantitative.

We will use both qualitative and quantitative methodologies, and then employed analytical techniques and processes to review the data. Qualitative (Gathering Insights) Qualitative is a one on one system. In this method a researcher ask questions sprightly. The questioner of the qualitative system shows the action for gather information and opinions but it is also accentuate interviewer to probe the richness of emotions and motivations related to the subject. Analysts use qualitative data to help clarify hypotheses, beliefs, attitudes and motivations.

Qualitative work is often a first step because it allows an analyst to fine-tune of the language that will be used in quantitative tools. Quantitative (Establishing Statistical Reliability) Quantitative process shows, a large number of people are participating in questionnaires that these are generally multiple choice and participants answer the most effective one. This type of research make sure a large number of data which generalized a large number of people and allow for direct comparisons between two or ore groups. Mixed method is usually used for some quantitative but mostly qualitative to identify mechanisms.

Here research question are addressed through the case study and mixed method study has an extensive exploratory aims. According to Denzin & Lincoln (1998) it will be seen as an instrumental case study and here every case is examined to provide insight into an issue or a different phenomenon and for developing the main theory. All that the case study inquiry relies on multiple sources. 3. 4: Research Sample: For more accentuate the research on evaluation of microfinance and women empowerment in the northern area in Bangladesh I must follow various journals, books, web site, interviews which will be of course annexed with evidence. . 5: Research Ethics: Microfinance makes a vital role to play in growth according to proponents of microfinance. In the year 2004 UNCDF shows that microfinance has some key roles for the development. These are as follows: * To help those who are very poor households and not able to meet basic needs and unable to protects against risks. * Microfinance is associated with improvements in household economic welfare, to empower women by supporting women’s economic participation. When we are conducting a research some ethical issues do arise like * Confidentiality Anonymity. * Reassurance When we are carrying a survey. Confidentiality is very important. People might get scared with where we are going to use this information’s and so on. So it is very important that we maintain all these data’s with confidentiality. While we are gathering the data for our research, we have to make sure that it doesn’t bother participants to take part in the survey. It also complies with the questionnaire while we are preparing our questionnaire we shouldn’t put any question which they might think not to answer or might get offended.

The questionnaire should be concise and objective for the survey. So the participants’ can be reluctant to give the required data for maximising the inputs. And at the end we should reassure them that this data’s are strictly confidential and will be used only for research purpose. If they want they don’t have to give us their name and address just to be anonymous. * 3. 6: Research Reliability and Validity: In between the given time the research work will be completed and for the research work every act will be followed by a honesty and with full proof evidences. 3. 7: Research Plan:

Timetable showing when the different aspects of your dissertation will be carried out. Research activity| Time| Resources | * Review of the comprehensive literature. | June 15-302010| * Journals * Books| * Design of questionnaire res/interview| June 30- July2010| * Questionnaire * Resources for interview( recorder)| * Data analysis and Findings| By August 2010| * Excel software. | * Conclusion and Recommendations. | By October 2010| * | * Reflective Statements. | By November 2010| * | * Bindings and Submission. | By December 2010| * Completed dissertation. In the conclusion of the methodology there are shown the traditional approach in the very beginning. This is done by adhering to conceptual and methodical consistency. Here also done multilevel research that makes the easy analysis of the proposed project. It is also illustrated that the methodological integration is important but for the limited time and limited interviews is not enough for this research. Chapter 4 Reflective experience: A reflective statement is a process of writing down a whole experience of conducting a research. What sort of pleasant and unpleasant experience a researcher faced throughout the whole research.

How did he/she overcome it. I, as a researcher this is the first time I am writing a reflective statements. And as I found out that conducting a research is not easy at all. In our first class we had been told that we have to find a topic within 8 days. At the beginning the researcher thought it won’t be that difficult but eventually I found out how hard is it to find a perfect topic than narrowing it down. So in this research, the researcher had to struggle a hard to choose a topic which relates to the field he want be an expert and as well as it fits to the course.

The researcher had to go through a humongous amount of reading to the different library and as well as online. He had to go through a world of problems like not having any related topic, if by any chance get some, that was not organised and also not matching for dissertation. Eventually after a huge effort he matched a topic which relates both the related field and his course. Now then he done his chapter 1 (overview/ introduction) lightning struck him straight away. Its Literature review and methodology the researcher couldn’t find any shed of hope that he will go through with it.

He thought that’s it he can’t go any further. Then tuition provider provides him a journal archive where he couldn’t find enough journals. Even though after going through all of them and a few books researcher found himself bewilder in literature review and research methodology. Because every single writer gave different definition and explanation about this topic may be it because all of them journal contexts were from different countries and cultures. Then he was puzzled to think and write. He couldn’t think a creative thought and analyse it critically.

Topic is Same but idea was different, which tells identify different strategies. These are the kind of problems he faced. Then the researcher brought himself together and started concentrating on reading again with taking notes, ideas and quotation. The researcher had to run different places to read about the topic. Although he had to take a decision, which he did carefully. He had to cut some non useful articles to make fit with rest of the data. In addition, the researcher went through a really tough time when he was thinking about the research methodology.

Firstly he found no data or theory that he can use. Secondly he had to read a wide range of books and journals from different university as well as schools library to find something useful. Also the researcher had been through a wide range of journals reading that also gave him lots of hectic research work but helped him to get relevant and most effective data for his research. The researcher felt an apprehension about data collection that he will go through some very unpleasant time. His targeted people are in Bangladesh who is hardly literate.

So conducting survey on them it will give him and the survey company a hard time. It will take ages to make them understand what it is? And as most of them are uneducated he has to collect audio recording of the entire survey. But at the end he got a feeling that doing this research it will be interesting and challenging. So he is looking forward to it. References: DICHTER, T. W. (1996), Questi oning the future of NGOs in microfinance. Journal of International Development 8(2): 259-269. DITCHER, T. W. (1997), Appeasing the Gods of sustainability: The future of international NGOs in microfinance.

In D. Hulme, & M. Edwards, eds. , in association with Save the Children Fund. NGOs, states, and donors: Too close for comfort? pp. 128-139. London: Macmillan Press. FISCHER-ROSENTHAL, W. (1995), The problem with identity: Biography as solution to some (Post) Modernist dilemmas. Comenius 3: 250-265. KABEER, N. (1994), Gender-aware policy and planning: A social-relations perspective. In M. Macdonald, ed. , Gender planning in development agencies, pp. 80-97. Oxford: Oxfam. KABEER, N. (1997), Reversed realities: Gender hierarchies in development thoughts. London, New York: Verso.

KABEER, N. (1998), Money can’t buy me love? Re-evaluating gender, credit, and empowerment in rural Bangladesh. Brighton: IDS, Discussion Paper No. 363. KABEER, N. (1999a), Resources, agency, achievements: Reflections on the measurement of women’s empowerment. Development and Change 30: 435-464. 231 KABEER, N. (1999b), The conditions and consequences of choice: Reflections on the measurement of women’s empowerment. Geneva: UNRISD, Discussion Paper No. 108. KABEER, N. (2001a), Conflict over credit: Re-evaluating the empowerment potential of loans to women in rural development.

World Development 29(1): 63-84. KABEER, N. (2001b), Reflections on the measurement of empowerment. In N. Kabeer, P. McFadden, S. Arnfred, E. Dominuez & S. Sudallaah, eds. , Discussing women’s empowerment – Theory and practice, pp. 17-57. Stockholm: Novum Grafiska AB, SIDA Studies No. 3. KABEER, N. (2003), Assessing the ‘wider’ social impact of microfinance services: Concepts, methods and findings. IDS Bulletin 34 (4): 106-114. KABEER, N. & D. RAJASEKHAR (1997), Micro credit and its impact on poverty, wellbeing and gender equity: Some evidence from Bangladesh and India’.

Presentation at the International workshop on Gender, Poverty and well-being: Indicators and strategies’ organized by UNRISD, UNDP & CDS at Kerala. (November 24-27). LEDGERWOOD, J. (1999), Microfinance handbook. An institutional and financial perspective. Washington, DC: World Bank. 232 LEDGERWOOD, J. & F. MUSANA, eds. , (2002), Accessing capital by MFIs. Proceedings of a Workshop held in Kampala, February 2002. Kampala: USAID/Bank of Uganda – GTZ and SPEED, Financial System Development Project 2002, FSD Series No. 7. OTERO, M. (1994), The evolution of nongovernmental organizations toward financial intermediation.

In M. Otero & E. Rhyne, eds. , The new world of microenterprise finance: Building healthy institutions for the poor, pp. 94-104. West Hartford, CT: Kumarian Press. ROGALY, B. (1996), Micro-finance evangelism, ‘destitute women,’ and the hard selling of a new anti-poverty formula. Development in Practice 6(2): 100-112. SCHREINER, M. & J. YARON (2000), Ways donors can help the evolution of sustainable microfinance organisations. Savings and Development 24(4): 423-437. SCHREINER, M. (2000), Informal finance and the design of microfinance. Development in Practice 11(5): 637-640.


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