Evaluating the Impact of Microcredit on Women's Empowerment In Pakistan

This paper evaluates the impact of microcredit on indicators of women's empowerment in the urban slums of Lahore, Pakistan. Specifically, it examines the effect of giving small loans to poor women on intra-household decision making. The study uses a household level instrument that contains information on different dimensions of household decisions such as those related to children, health, social mobility, economic and major household purchases. It controls for endogeneity by using proxies for initial levels of empowerment, matching the controls and treated units on observable characteristics. The study finds that participation in the microcredit program is insignificant in explaining all the outcome indicators of empowerment for sample households. Findings suggest that:

• Microcredit intervention has no effect on the bargaining power of women within the household for child related, health, economic and social mobility decisions;
• Microcredit intervention does empower women in household decisions where they are usually least empowered, such as decisions relating to purchases of large and expensive consumer goods.