Empowerment Through Microfinance: The Relation Between Loan Cycle and Level of Empowerment

•Female borrowers in higher loan cycles more empowered.•Significant impact of microfinance on financial empowerment.•Loan decisions and mobility are main empowerment indicators.

SummaryDoes microfinance support the empowerment of female borrowers? Results of studies analyzing microfinance and empowerment delivered mixed results. In order to explore whether microfinance influences empowerment, the paper compares women in higher loan cycles of a Pakistani microfinance institution with those in the first loan cycle regarding their empowerment. Using a survey and multivariate statistical methods, such as propensity score matching, the study found that women in higher loan cycles were on a higher level of empowerment. We conclude that microfinance has an impact on the empowerment of female borrowers.