Rewriting Rural Economies: Women Entrepreneurs and Microfinance in Pakistan

Abstract

Despite the abundance of literature on microfinance in Pakistan, its impact on business opportunities for women remains underexplored. While existing literature identifies a positive relationship between access to finance and women’s empowerment, it often overlooks entrepreneurial opportunities and income generation. This study aims to bridge this gap by analysing primary data collected through a survey of 86 female entrepreneurs operating small-scale businesses in rural Islamabad. The analysis, utilizing binomial logistic regression, determines the effect of credit size, social capital, and socio-cultural factors on the probability of business success and tests for the mediation effect of opportunity between these variables. The findings reveal a positive relationship between microfinance-associated factors, such as credit and social capital, and business performance, solidifying the negative impact of sociocultural barriers. Although opportunity does not mediate the relationship between independent variables and business performance, this research is part of the growing consideration of gender in sustainable economic development. It provides valuable insights for researchers and policymakers in crafting inclusive and sustainable policies that enhance women’s financial contributions.