Culture, Economics, and Cross-National Variation in the Founding and Social Outreach of Microfinance Organizations

Microfinance is widely hailed as a sustainable approach to global poverty reduction, particularly among women who are over-represented among the world’s poor and often lack access to traditional labor markets and financial instruments. In this regard, evidence suggests that microfinance positively affects women’s empowerment, social capital, and economic conditions. However, there is considerable cross-national variance in the prevalence of microfinance organizations as well as in their commitment to women’s lending, the underlying causes of which are not well understood. The few studies which have examined these issues offer economic explanations, promoting neoliberal economic reform as a catalyst for entrepreneurial activity; an approach that is also favored by development agencies such as The World Bank. We argue that this approach is limited, however, because it fails to take into account the status of women as microfinance clients. Combining insights from organizational sociology and culturalinstitutional perspectives on gender inequality, we suggest that patriarchy will suppress the founding of microfinance organizations as well as their outreach to women. We further argue that while neoliberal economic policies may help address the patriarchal barriers to microfinance organization foundings, they will likely amplify its suppression of women’s lending. (192 Words)