Finance is an evolving concept globally, and several factors drive the change we witness in the financial world. So integral is finance in the everyday world that it is a factor that significantly plays a role in discrimination. Most marginalized groups today suffer from poverty and inequality, all of these fueled by their financial strength, which generates power to oppress or exposés individuals in oppression. Incidentally, marginalized groups are at a higher risk of enduring disease burden and are exposed to poor health care factors that directly affect the economy (Baah et al., 2019). Similarly, microfinance has also evolved both in meaning and purpose. Initially, these institutions existed to finance minor business personalities and individuals who could not afford some quality banking services since their net worth was deemed too small. However, today microfinance institutions play a significantly different role; in the modern world where premiums matter and people would stop at nothing to secure their future, microfinancing institutions have adopted a new role to avail such services to the marginalized in society. These marginalized groups in some parts of the world represent women and children who cannot access such services due to their age limit or lack of empowerment. Therefore, understanding what microfinancing entails would be essential to demonstrate its impact on marginalized groups, specifically women and children in different parts of the world.
Ardently focusing on its impact on women and children, scholars have noted these institutions’ role. According to Rehman et al. (2020), microfinance institutions bring changes in women’s household conditions and their social status by offering services such as interest-free loans. Categorically most of these institutions target women in their formation in developing countries, with the majority aiming at the independence of women and supporting their dreams in male-dominated economies in developing countries. Inspired by women in developed countries, women dare challenge men in the financial world by purchasing assets and taking loans for business development, aiming to close the gap between men’s and women’s finances in developing countries. Nonetheless, the sector has extended its services to children in developing countries to secure their future in the event that most of these young ones live with uncertainty, citing their parents’ inability to pay substantial premiums and insurance coverage. The packages availed by most insurance firms are deemed too expensive to procure; hence most parents resolve to save the little they can get for their children through these microfinancing institutions. Their ease of access and ability to offer proper guidance on financial decisions play a pivotal role in ensuring that women trust them and feel more incentivized to approach them rather than going to established banks to seek such services.
Aim of the Study
- To elaborate on the idea of microfinance in developing countries.
- Understand the impact of microfinance on marginalized groups, specifically women and children.
- To establish the relationship between microfinancing and women empowerment.
How does microfinancing affect marginalized groups in developing countries, specifically women and children?
Background of the Study
Women empowerment in developing countries has always been a concept of focus for different parties worldwide. According to Le & Nguyen (2021), studies concur that women’s empowerment through education helps in decision-making in finance-related matters. However, every individual attributes the recent change in fortunes for women to their involvement in microfinancing and the recent growth of these banks worldwide. Access to financial services such as insurance premiums is quite a challenge in developing countries; such services are reserved for the elite in these nations. Hence the marginalized groups struggle so much trying to catch up with their counterparts economically.
Furthermore, other aspects of the economy, such as loan financing, are deemed too expensive for the commoner; hence, only a section of the population can access loans which limits the margin groups from developing their businesses, making them live on a hand-to-mouth basis. Considering such factors, women and children are left dependent on men who have a financial advantage on such grounds. Considering that women are victims of unequal inheritance, men are more likely to secure business development loans and other financial benefits insured on their assets, such as land, which, unfortunately, women do not have the privilege to inherit. Putting this into perspective, men would always have the upper hand regarding financial liberty compared to women.
Nonetheless, there are glimpses of a brighter future facilitated by the recent growth in micro-financing institutes, which have helped financially bridge the gap between men, women, and children. Access to financial resources has been seen as a measure to reduce the gender discrepancies witnessed in developing countries (Batinge& Jenkins, 2021). Encouraged by governmental and nongovernmental institutions, these banks have sprouted all over these developing countries since they are incentivized by government tariffs, among other tax benefits. Also, women empowerment groups these banks have helped empower women through these aforementioned banks.
Amply women are at the forefront of these considerations, and the ripple would later reach the children who would be included as the services get closer to them. Intrinsically women are encouraged to have been encouraged to start businesses that would be funded through loans and business development. Women are encouraged to dream and take risks financially through empowerment groups without fear of failure, curtailing the stereotypes directed towards them and derailing their financial development. Getting through these mental barriers is the first step in developing and closing the gap. The growth facilitated by the women empowerment group leads to bold moves and women making powerful innovations in fashion, economics, and sports, to mention a few.
Comparatively, children’s empowerment in developing countries takes the shape of financial institutions which allow savings for them. Also, parents have taken such initiatives in developed countries and opted for saving for their children’s education and health which are probably cheaper, rather than going for the relatively expensive insurance premiums. Therefore, children and adolescent innovation are currently on the rise owing to such empowerment from their parents. Ultimately, microfinance institutions also improve children’s nutrition (Gichuru et al., 2019). Through access to no physical collateral loans in these microfinancing institutions, women can access a quality diet that improves their children’s nutrition from birth. The children dare venture into innovation, and from the savings, at their disposal, they can commit to projects with financial backing. Moreover, children can explore their talents by buying equipment in music or sports, which later offer financial security if their talents pay off.
The rationale for the Study
Understanding how finances impact individuals is essential for government and investors from different regions. Focusing on developing countries, governments would know where to improve and what to do to secure their disadvantaged populations from financial insecurities. Microfinance institutions are tools for promoting social and economic development (Nogueira et al., 2020). Apparently, the research focuses on the marginalized group on which the government has extensive data; cushioning these financial groups would not be difficult with these research results at their disposal. Further scholars would have access to essential data from the results and recommendations of this research. Besides, with the definition of microfinance and their roles at different levels, they possess valuable knowledge of the financial world in developing countries. They would understand the financial inequalities that affect regions globally and the causes. Notably, those interested in women empowerment stand to gain the most from the research. Understanding the role of microfinance in developing and empowering women and children would shift their attention towards such approaches. Typically research-based data is vital in making investment decisions, and the research offers quality data in this regard.
The economy of different areas is directly influenced by several factors, such as marginalization and empowerment. In most societies in developing countries in the world, women and children are the ones who suffer the most from natural calamities such as draughts and when issues such as war erupt. In the same breath, they are not spared regarding marginalization and poverty in this region. Therefore, if they were any efforts to improve the livelihoods of the population in developing countries, those in dire need of help would be the women and children in these societies. Consequently, several institutions have recently sprouted to help cushion the most vulnerable, microfinancing institution being one of them. Therefore, the entire research would dwell on the evolution of these microfinance institutions and what they entail. The research would also entail the role microfinance institutions play in these nations and how they, directly and indirectly, affect the marginal groups, women, and children in particular. Further, the research would linger on these microfinance institutions’ relationship with women empowerment. However, the research would not cover microfinance institutions’ role in other marginalized groups based on different categories as it solely focuses on women and children.
Microfinance and the Role it Plays
In the past, microfinance was all about the provision of loans for poor individuals in order to improve their livelihoods and give the business a boost. Most of the individuals living in these areas lacked the means to access banking services and hence lacked crucial exposure to loans for business and personal development, consequently leading to these poor lifestyles. Setting camps in developing countries, these institutions set out to eliminate poverty and improve the economic activities in the area. Probably these steps would have led to improved lifestyles and quality services in these regions. However, recently these institutions have paid more attention to marginalized people who have failed to access different banking services. In developing countries, women and children are the ones who suffer the most from the lack of these financial resources at their disposal. Some of these institutions are government, whereas others are nongovernmental. Their goals are compatible with most women empowerment programs in developing countries. They merged their efforts to improve the quality of life of women and children in these areas.
Therefore, microfinance institutions have stood out to play significant roles. Notably, they have improved the financial status of several minority groups, but as we focus on women and children. Intrinsically microfinance has played an essential role in children’s education and nutrition. Women in developing countries have transformed their lives due to the partnership between these microfinance institutions and women empowerment groups. The reduced dropout rates in these areas can be attributed to microfinance institutions now all over. Parents have access to education loans, which helps keep the children in school. Family planning is now practiced in this population whilst reducing the financial budget of a household. As a result, children can now access quality nutrition, health, and education made affordable by their parents through financial institutions,
Microfinancing institutions have enabled talent progression in children and reduced mortality and morbidity. Children succumbing to diseases are now lowered. Children’s savings enabled by these banks enable parents to plan for the future. as opposed to the past where children would succumb to health complications and lack of treatment, children presently stand a chance thanks to these banks which can offer quick loans on top of saving accounts for these children. Aptly, talent progression is on the rise due to microfinance institutions. Children can access transport to training fields and education, which help them nurture their talents. The empowerment groups in the area also help them push for their dreams through the facilitation of training, all financed by these microfinance groups.
Similarly, the impact of microfinance on women has been tremendous. Women in developing countries enjoy better health care and education through micro-financing institutions. Women’s financial education is on the rise as they have the power to make financial decisions in the household and when they are running businesses. as opposed to the past when the male gender dominated financial decision-making. In these countries, women now have the power to make informed decisions on loan procurement and services.
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