Access to microfinance and female labour force participation

Although microfinance started as a movement to improve women’s economic well-being through increased female entrepreneurship in particular, its impact on women’s attitudes toward and participation in the labour market is not fully understood. We fill this gap by combining data on branch locations of the major microfinance institutions in Bangladesh with household survey data and implement a spatial regression discontinuity design. Our estimates suggest significant effects of access to credit on women’s work; attitudes towards gender, social and employment norms; and psychosocial well-being. Access to credit increases labour force participation in terms of paid employment and traditional economic participation. Relatedly, respondents are more likely to be prevented from working by their husbands or other household members. They are also more likely to express traditional beliefs in relation to gender, social, and employment norms. Finally, access to credit leads to a loss in life satisfaction, financial satisfaction, health satisfaction, and overall happiness.