Microcredit and Rural Women Entrepreneurship Development in Bangladesh: A Multivariate Model

Abstract

Microcredit programs have a positive socioeconomic impact on the rural female borrowers of Bangladesh. This study suggests that the microcredit programs do not help the borrowers to develop any entrepreneurial capabilities other than survival. Thus, this paper aims at identifying the factors related to the development of entrepreneurship among rural women through the microcredit programs of providers. A multivariate analysis technique (Factor Analysis) was conducted to identify the factors related to entrepreneurship development. Structural Equation Modeling (SEM) was used to identify the relationship between microcredit programs and the development of rural female entrepreneurship in Bangladesh. Results show that financial management skills are the most important factor and have a significant relationship with the development of rural women and entrepreneurship. Results also show that the group identities of the female borrowers have a significant relationship with the rural entrepreneurship development in Bangladesh. A borrower’s experience from the parents’ families and the limitation of options also lead to the development of entrepreneurship among the rural female borrowers of Bangladesh.

Keywords: Microcredit, Women Empowerment, Financial Management Skills, Experience from the Parents' Families