Why Micro-Credit May Leave Women Worse Off: Non-Cooperative Bargaining and the Marriage Game in South Asia

2023-02-15 Publications

Image by Rinku Jareda from Pixabay 

Micro-credit programmes targeting women continue to grow in South Asia, although research suggests that wives frequently hand over loans to their husbands. Women may also be unable to control the income generated by micro-enterprises. This article presents an intra-household bargaining model explaining these findings and showing how credit may leave women worse off, while benefiting men. This game-theoretic model also shows why a woman might rationally choose to give her loan to her husband even though she does not expect to benefit and knows he may not repay. Finally, the article identifies the conditions necessary for micro-credit to benefit women.

Sujata Balasubramanian
Adjunct Assistant Professor, Division of Social Science
Sujata Balasubramanian is a development economist who works on public policy issues related to…

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