Microcredit and Women Empowerment in Timor-Leste

ABSTRACT: Microfinance institutions (MFI) plays a strategic role in encouraging socio-economic development of the community. This study aims to examine the effect of MFI activities on the empowerment of weak economic women in Timor Leste. Following various previous studies, this study wants to compare how far the effects of MFI loans have been able to empower women through five dimensions of empowerment which include: control of savings and income, ownership of property and assets, making purchasing decisions and investing in households, self-efficacy, and self-esteem. Increased empowerment is examined by comparing women who have obtained loans with women who have not received a loan. The method used was a survey by distributing questionnaires online to around 300 respondents. Data from the first three dimensions (savings and income control, property and assets ownership, and purchasing and investment decisions) were analyzed by cross-tabulation of chi-square to determine the effect of MFI loans on the three dimensions. The last two dimensions (self-efficacy, and self-esteem) were analyzed by the Mann-Whitney test to determine whether the loans have been able to increase self-efficay and self-esteem. The results showed a difference between female loan recipients of and those who did not receive MFI loans in terms of control of business income χ2 (2, N = 303) = 9.0, p<0.05; land purchase χ2 (2, N = 303) = 7.35, p<0.05, and; confidence U = 9728.5, p = 0.027 (mean rank = 140). But there is no difference in terms of control of savings, and ownership of property and assets.

Keywords: microcredit, empowerment, women, Timor-Leste, microfinance