Why microfinancing prefers to lend more to women

Microfinance institutions lend more to women than men, Bangko Sentral ng Pilipinas Deputy Governor Bernadette Romulo-Puyat said on Tuesday.

“When you talk about microfinance institutions, they really lend more to women, because a woman thinks about the family, food for her family to eat for the day,” Romulo-Puyat said during her interview with the Daily Tribune’s online show Straight Talk yesterday.

Meanwhile, she said, when it comes to men, their spending priorities are directed to things other than the family.

Microfinance refers to formal and informal financial services offered to the poor, with the common service being microcredit, or loans to start or sustain small enterprises, which are granted often without physical collateral.

These enterprises are expected to be profitable and assumed to enable a virtuous upward spiral of economic, social, and political empowerment for borrowers.

Efficient credit provision

Here in the Philippines, MFIs target women, with the dual objective of empowering them through access to credit and ensuring that aid is channeled efficiently because women are perceived to be more prudent and invested in the well-being of their families.

Discussion of development as an expansion of women’s freedom and agency, which is expected to occur when women contribute financially to the household and gain greater leverage in decision-making.

MFIs also provide countries and international donors with a win-win solution of poverty alleviation at a profit. Its narrative of inclusivity and empowerment celebrates the entrepreneurial potential of traditionally marginalized groups and their capacity to help themselves instead of relying on dole-outs.

The Philippines has been recognized for providing a business environment within which microfinance institutions thrive.

For instance, the Consultative Group to Assist the Poor declared the country’s microfinance industry as “the best in implementing microfinance programs to reduce poverty” during the International Year of Microcredit in 2005.

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