CHAPTER I

INTRODUCTION

1.1 Background of the Study

Empowerment of women primarily consist three dimensions, the enhancement

of bargaining power at household and in community; providing visible foundation for
income generation and meaningful participation at institutional and policy level.
Similarly, women empowerment is all about transformation of the power relations
between individuals and social groups. But it is very critical and a challenging process
as it is deeply rooted in social norms and values. To shift social power relationships
one has to challenge patriarchal ideology. Because it justifies gender discrimination
and social inequalities, prevailing unequal pattern of access and control over
resources; and the social structures which enforce unequal social relations (Fernando,
2006).

The concept of women's empowerment emerged with the aim of enhancing

women's capabilities. It revolves around strengthening women's control over their
thoughts and ideas, fostering their participation in education, social activities, and
engagement in economic and political spheres. Empowering women involves
improving their decision-making abilities for personal development. Feminist
movements worldwide have played pivotal roles in advancing women's
empowerment. Additionally, microfinance, encompassing services like loans, savings,
and insurance, caters to underprivileged entrepreneurs and small business owners
lacking collateral for traditional bank loans. This form of banking extends financial
services to the unemployed or low-income individuals, fostering self-sufficiency by
providing opportunities otherwise inaccessible through conventional means (Kagan,
2019).

Microfinance constitutes the provision of financial services tailored for

individuals with low incomes and limited access to traditional banking. Its core
mission is to address the multifaceted challenges faced by impoverished populations,
including exclusion, poverty, and limited opportunities. Functioning as a potent
instrument in the battle against poverty and underdevelopment, microfinance aims to
deliver financial services directly to the underprivileged when needed, at their
convenience, and in their local environments. Microfinance institutions target

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individuals and small businesses excluded from conventional banking, offering a
spectrum of services such as microcredit, small loans for the poor, savings and
checking accounts, micro-insurance, and payment systems. These services are
intentionally designed to be more affordable for socially marginalized customers,
fostering their self-sufficiency. Initially centered on microloans for entrepreneurs and
small businesses lacking credit access, microfinance has evolved into a broader
movement, aspiring to create a world where everyone, especially the poor and socially
marginalized, has access to a range of affordable and high-quality financial products
and services, encompassing credit, savings, insurance, and payment services (Hermes,
2014).

The transaction of microfinance is done by microfinance institutions, which

range from small non-profit organizations to larger banks. Microfinance institutions
include both for-profit companies as well as non-profit organizations. Among the
services they offer are small loans, help setting up and maintaining a savings account
and money transfers, as well as help obtaining insurance for a variety of needs, such
as death, illness or loss or property. In order to keep their services running,
microfinance institutions typically charge significantly higher interest rates than those
on a traditional bank loan (Srivastava, 2009).

Microfinance has emerged as a powerful tool for women empowerment in the

new economy. In India, microfinance distribution is mainly dominated by Self Help
Groups (SHGs). It aims at providing a cost effective mechanism for providing
financial services to the poor section of the society. Efforts on women empowerment
will help society to get rid of social evils. There is a long way to take people away
from poverty but SHGs can become significant tool to achieve this objective through
microfinance programs. SHGs are the most contemporary modes for poverty
eradication and women empowerment in India. Microfinance helps poor people
including women in getting employment, increasing confidence, enhancing
communication skills and in other aspects as well. Women gain greater control over
resources like material possession, intellectual resources like knowledge, information,
ideas and decision making at home, community, society and nation through
involvement in these microfinance programs (Srabanti & Proloy, 2011).

Empowering women is a vital tool for alleviating poverty. Empowered women

contribute to the health and productivity of whole families and communities and to

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improved prospects for the next generation. There have been several institutions
advocating for women empowerment, but women are still poor and vulnerable as
compared to men. The main reasons for the same are economic dependence on male
members, rapid increase in population, unemployment, illiteracy and lack of access to
credit. When their economic, cultural and social status improves, it is known as
women empowerment (Suja, 2012).

This study was conducted to find out the role played by microfinance on
women empowerment in Birendranagar, Surkhet. Besides that, study was conducted
to assess the role that is played by microfinance in enhancing the women
empowerment by providing training, motivation, decision making, changing lifestyle
and creativity among women entrepreneurs.

1.2 Scope of the Study

This study focuses on the role of microfinance in empowering women in

Birendranagar Municipality, Surkhet, examining how microfinance influences income
level, educational attainment, decision-making capacity, motivation, and creativity.
Microfinance provides women with access to small loans, financial literacy programs,
and skill development opportunities, enabling them to engage in income-generating
activities and improve economic independence. The study investigates how increased
income through microfinance affects women’s financial autonomy, while educational
and training programs enhance knowledge and skills, supporting better decision-
making. Additionally, participation in microfinance programs may foster motivation
and creativity, encouraging entrepreneurial initiatives and active involvement in
household and community decisions. By focusing on these variables, the research
aims to provide evidence of microfinance’s contribution to women’s empowerment,
highlighting both economic and social impacts, and offering insights for
policymakers, financial institutions, and community development programs to
strengthen women-centered microfinance initiatives.

1.3 Objectives of the Study

The main objective of this study is to assess the role of microfinance on

women empowerment in Birendranagar Municipality, Surkhet. The general objectives
of this study are as:

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1. To find out the impact of income level due to involvement in microfinance on
women empowerment.

2. To determine the impact of educational level due to involvement in

microfinance on women empowerment.

3. To analyze the impact of decision making due to involvement in microfinance

on women empowerment.

4. To identify the impact of motivation due to involvement in microfinance on

women empowerment.

5. To find out the impact of creativity due to involvement in microfinance on

women empowerment.

1.4 Research Questions

This study has tried to find the answers of the following research questions:

1. What is the impact of income level due to involvement in microfinance on

women empowerment?
2. Does educational level due to involvement in microfinance affect women
empowerment?
3. Does decision making due to involvement in microfinance affect women
empowerment?
4. How does motivation due to involvement in microfinance influence women
empowerment?
5. What is the impact of creativity due to involvement in microfinance on women
empowerment?
1.5 Conceptual Framework of the Study

A conceptual framework is an analytical tool with several variations and

contexts. It is applied in different categories of work. In this study, a conceptual
framework is developed on role of microfinance program on women empowerment in
Birendranagar Municipality, Surkhet. The income level, educational level, decision
making, motivation and creativity are taken as independent variables and women
empowerment has been taken as a dependent variable. The conceptual framework has
been shown in the following figure:

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 Independent Variables
Dependent Variable
- Income level
- Educational level Women Empowerment
- Decision making
- Motivation
- Creativity

Figure 1: Conceptual Framework of the Study

Income Level
Income level due to microfinance can be specified as the increase or
improvement in personal or household earnings of women resulting from access to
microfinance services such as small loans, savings programs, and financial training. It
enables women to invest in income-generating activities, manage family expenses
effectively, and improve their overall economic status. Scholars emphasize that higher
income through microfinance not only strengthens financial independence but also
enhances decision-making power and social participation, which are critical aspects of
women empowerment. Women who benefit from increased income due to
microfinance are more likely to participate actively in household and community
decisions, contribute to family well-being, and achieve greater social recognition
(Armendáriz & Morduch, 2010).
Educational Level

Educational level through microfinance refers to the enhancement of

knowledge, skills, and learning opportunities that women acquire by participating in
microfinance programs. These programs often provide financial literacy, business
management training, and awareness sessions, enabling women to gain practical
education beyond formal schooling. Such education empowers women to make
informed financial and household decisions, manage resources efficiently, and engage
actively in community development. By improving their knowledge and skills
through microfinance, women can utilize financial resources more effectively, expand
income-generating activities, and strengthen their social and economic empowerment
(Mayoux, 2001).

Decision Making

Decision-making refers to the process of selecting the best course of action

from available alternatives. Participation in microfinance programs enhances

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women’s decision-making capacity by providing financial resources, knowledge, and
exposure to business management practices. Women engaged in microfinance gain
the ability to make informed choices regarding household expenses, income-
generating activities, and small business investments. This empowerment enables
them to take initiative, manage resources effectively, and contribute to both family
welfare and community development. Strengthened decision-making skills through
microfinance not only improve economic outcomes but also foster confidence,
independence, and active participation in social and entrepreneurial activities
(Drucker, 1974).

Motivation

Motivation can be specified as a management process, which encourage

people to work better for the overall benefit of the organization, by providing them
motives, which are based on their unfulfilled needs (Herzberg, 1959). Motivation
plays a crucial role in women empowerment within organizations. By understanding
and addressing the unique needs, aspirations, and challenges faced by female
employees, managers can provide tailored incentives and support that encourage
women to perform at their best. Motivated women are more likely to participate
actively, take leadership roles, and contribute meaningfully to organizational growth.
Conversely, when women employees lack motivation due to limited opportunities,
gender bias, or insufficient support, they may underperform, disengage, or even leave
the workforce. Therefore, fostering motivation is not only essential for organizational
success but also serves as a powerful mechanism for empowering women and
promoting gender equity in the workplace (Ryan & Deci, 2020).

Creativity

Creativity is the generation of ideas that results in the improved efficiency or

effectiveness of a system. Its two important aspects are process and people (Matherly
& Goldsmith, 1985). The problem-solving and innovative process described
highlights the importance of empowering women in organizations. Women who are
encouraged to think creatively, challenge existing assumptions, and propose
innovative solutions become active contributors to organizational success. By
providing women with opportunities to lead, make decisions independently, and
tackle problems from unique perspectives, organizations not only harness diverse

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talent but also promote women’s confidence, autonomy, and professional growth.
Empowering women in such roles ensures that their ideas and approaches are valued,
fostering an inclusive and dynamic workplace culture (OECD, 2019).

1.6 Research Methodology

This section consists of the research methodological instruments that were

used to carried out this study. It includes research design, population of the study,
sampling design and sample size, questionnaire development, questionnaires
administration and data analysis and presentation which are described as
follows:

1.6.1 Research Design

A research design is a systematic approach that a researcher uses to conduct a

scientific study. It is the overall synchronization of identified components and data
resulting in a plausible outcome. To conclusively come up with an authentic and
accurate result, the research design should follow a strategic methodology, in line
with the type of research chosen (Hilde & Kampen, 2018). Therefore, in this study,
descriptive type of research design was employed in which quantitative data were
collected from the respondents.

1.6.2 Population of the Study

There are 11 microfinance companies in Birendranagar Municipality,

Surkhet. The target population of the study were all the women who were
involved in microfinance program in Birendranagar Municipality, Surkhet.

1.6.3 Sampling Design and Sample Size

A sample design is the framework, or road map, that serves as the basis for the
selection of a survey sample and affects many other important aspects of a survey as
well. In a broad context, survey researchers are interested in obtaining some type of
information through a survey for some population, or universe, of interest. One must
define a sampling frame that represents the target population of the study from which
a sample is to be drawn. The sampling frame may be identical to the population, or it
may be only part of it and is therefore subject to some under coverage, or it may have
an indirect relationship to the population (Creswell, 2014). In this study, convenience
sampling design was used to fulfill the objectives of this study. Out of the total

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population, 55 were selected as sample.

1.6.6 Questionnaire Development

Questionnaire of the study was developed in Nepali and English language

because all the respondents were not able to understand English language. Some
questions were self-developed and some were adopted from previous researches.
Most of the questions were formulated in close-ended patterns. It means that the
nature of questions was based on multiple chose categories. The questionnaires were
related to the personal information of the respondents and the questions related to the
objectives of the study. Among the questionnaires, 6 questions were related to the
personal information of the respondents and 19 questions were related to the
variables.

1.6.7 Questionnaires Administration

Direct communication has been made with the respondents to collect

information and discuss about the survey work. Then the respondents were requested
to set the proper time for visit. Sample size of the survey was 65 women involved in
microfinance in Birendranagar Municipality, Surkhet. Questionnaire were self-
administered to the respondents and discussed individually. The data were collected
between ………………….. to …………………….

1.6.8 Data Presentation and Analysis

Preliminary cleaning and formatting is the first step in the data preparation. For
the analysis of data, frequency, percentages were used to describe the nature of data.
After analysis of each question, the figures have been shown in different table as per
the requirement of the subject matter.
1.7 Limitations of the Study
Today's world is dynamic. Everything existing here are of limited characters.
Every principle, role, formula and conditions are applied within limitations. Likewise,
this study cannot escape from limitations. Therefore, the limitations of this study are
as follows:
1. This study is limited to only the women involved in microfinance.
Thus, the result will not be applicable to other group of women.
2. The study area is limited to Birendranagar Municipality, Surkhet only.

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 3. The data have been collected through primary source which were
obtained from 65 respondents only.
4. Convenience sampling method was used to select the sample.
1.8 Organization of the Study
This study has been organized within the following chapters:
Chapter I: Introduction
Chapter I has included the background of the study, scope of the study,
objectives of the study, research questions of the study, conceptual framework of the
study, research methodology, limitations of the study and organization of the study.
Chapter II: Data Presentation and Analysis
Chapter II includes the presentation and analysis of data. This chapter also
includes the findings of the study.
Chapter III: Summary, Conclusions and Recommendations
Chapter III includes the summary, conclusions and recommendations.
The concluding part of the study consists of the references and appendix.