Experiments studying the impact of microcredit have not been able to provide answers to why microcredit works in some contexts while it does not work in some others. There have been studies that have found certain pre-conditions of the households that play an important role in advancing the impact of microcredit such as financial resources, human capital, and physical capital. Other such relevant factors are the norms around decision-making, gender roles, and bargaining power within the household. Therefore, it is important to understand these factors in detail. Through this study, we wish to understand whether microcredit is a useful tool in increasing women’s intrahousehold bargaining power, and consequently whether it has any positive impact on other socio-economic outcomes for the household.
The study is divided into two stages- the pilot stage and the full-rollout stage.
We propose to conduct a pilot survey for the study among a randomly selected sample of 360 Dvara KGFS (Dvara KGFS is a financial institution operating in remote and rural parts of 6 Indian states) customers. This will involve administering the survey instrument as well as the intra-household bargaining games among study respondents. The sample for the pilot survey will consist of two groups of KGFS clientele- (i) early stage KGFS clients who are in their first loan cycle and (ii) mature/late stage KGFS clients who are in their seventh loan cycle or more. This will allow us to test for the differences in the intra-household bargaining power between the two groups and examine the relationship between access to microcredit (via KGFS) and women’s bargaining power.
Full rollout stage-
To assess the impact of microcredit on women’s intra household bargaining power, we will conduct an augmented RCT, wherein we will randomly assign microcredit to half of the eligible clients who apply for microfinance loans (treated group), and then perform a lab-in-the-field experiment both at baseline, before the actual disbursement of the loans, and then 12 months after the loan has been rolled out. By comparing the two lab-in-the-field bargaining experiments and estimating the difference between treatment and control, we will measure the impact of microfinance loans on intrahousehold bargaining power of women. Finally, by comparing the findings from the baseline and the endline survey, we will examine the causal effect (Average Treatment Effect) of microfinance borrowing on new business creation, income, control over income, household consumption, as well as on measures of human development outcomes, such as education, health, and women’s empowerment. We propose to conduct the full rollout among 2000 households.