The impact of microfinance loan on women’s empowerment and happiness in Pakistan

Women empowerment is one of the central issues in the developing countries. This study investigated the empowerment and successful stories of poor women who participated in two microfinance programs in Pakistan; namely National Rural Support Program and Khushali Bank. Previous studies have shown how women’s participation in microfinance institutions can improve individual and household income. However, limited evidence exists on whether involvement in microfinance can improve the women’s economic decision making empowerment, freedom of movement empowerment and life satisfaction. This study is based on household level data collected from 744 poor women of Bahawalpur division in Pakistan. The results from the Multinomial Logit Model (MLM) estimation show that the women borrowers are more empowered and satisfied
than the non-borrowers. The probability of involvement in economic decision, having more freedom and happiness increases with the increase in loan size. However, marital status is found to be statistically insignificance to economic decision, while it has a positive influence on freedom of movement empowerment. Furthermore, the results also show that the probability of being happy decreases with age and marital status, but it
increases with family size and empowerment. Based on the analysis, the study concludes that the level of women empowerment and satisfaction of poor women in Pakistan can be significantly improved with the involvement of Microfinance Institutions. The results suggest that higher income increases the women's ability to contribute more to the household expenditure, eventually improving their empowerment and life satisfaction. This study recommends that while making policies and allocating the budget on
education, policymakers and other non-governmental organizations should focus on how these expenditures are distributed and who will be benefited from these. In addition, government and development organizations should work with greater cooperation in order to increase the women’s empowerment and happiness by implementing strategies to increase the availability of more educational programs and better guidance schemes for the borrowers.