Panel Paper:
Microcredit As a Tool for Poverty Reduction: A Case Study of Outcomes Among Low-Income Minority Women in the United States
*Names in bold indicate Presenter
Laila Davis Clark
Masters in Public Administration (MPA) Student
Department of Public Administration
College of Community and Public Affairs
State University of New York at Binghamton
PO Box 6000
Binghamton, NY 13902
Email: ldavisc1@binghamton.edu
Abstract
Microcredit serves an essential need for individuals seeking capital to start and grow their own small business, improve their income and quality of life, and contribute positively to the economic development of local communities. Microcredit schemes fill the gap created by traditional banks and other lending organizations that marginalize or exclude sub-groups in society based on structured financial criteria and perpetuate a vicious circle of poverty among groups. Women especially face stringent obstacles in obtaining credit and working capital in financial markets. Latest statistics show that half of all women are unbanked or underbanked, and women entrepreneurs account for only four percent of all traditional small business loans.
Among low-income minority women, especially, microcredit programs that give needed capital, and at the same time provide financial literacy skills and a network of support from peer entrepreneurs, present an effective tool for poverty reduction and economic empowerment. This study explores microcredit as a poverty reduction tool among low-income minority women in the United States. It focuses on Grameen America, a 501(c)(3) nonprofit microcredit organization in New York that provides small business loans, savings programs, and financial literacy to women living in poverty in the United States. The study investigates the microcredit program with a specific focus on low-income minority women. It examines the economic and social barriers low-income minority women encounter in the American financial system and the ways in which the microcredit program empowers them to overcome barriers, grow their business, and improve their quality of life as entrepreneurs. The study uses real-life cases of the organization’s impacts on low-income minority women to trace the causal linkages between microcredit and economic empowerment. Archival data is the primary source of information for the study and the analysis combines theories on human development and financial inclusion to deepen insights on this salient topic.
