Gender disaggregated effects of microcredit on capital accumulation in rural households

Rosemary Emegu Isoto and David Simon Kraybill

Agricultural Finance Review, 2018, vol. 79, issue 2, 204-216

Abstract: Purpose - The purpose of this paper is to contribute to the literature on microcredit impacts by quantifying the gender disaggregated effects of long-term borrowing on capital accumulation in order to address the existing gap. Separate models are estimated for male-headed and female-headed households to determine if the effects of microcredit differ between these gender types. Design/methodology/approach - The paper adopts the method proposed by Deaton (1990) in which he specifies a model without borrowing restrictions whereby the household maximizes an inter-temporal utility function. To account for self-selection and endogeneity of micro credit, the fixed effects instrumental variable approach is used. Data are disaggregated by gender and analyzed separately. Findings - The paper finds that micro credit indeed increases productive assets and human capital but has no significant effect on non-productive assets. One striking result is that after disaggregating the data by gender, the authors find no effect of micro credit on women-headed households. Practical implications - The paper provides an empirical evidence for the need to address gender issues in finance and lending. Furthermore, targeted lending particularly to women makes a great difference in the fight against poverty. Originality/value - This paper fills the gap on gender and micro credit impacts on capital accumulation in a developing country context.

Keywords: Gender; Microcredit; Uganda; Sub-Saharan Africa; Capital accumulation (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afrpps:afr-05-2017-0034

DOI: 10.1108/AFR-05-2017-0034

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