The Differential Impact on Gender Relations of 'Transformatory' and 'Instrumentalist' Women's Group Intermediation in Microfinance Schemes: A Case Study for Rural South India (Case Study‪)‬

Abstract This article starts from conflicting evidence regarding the impact of microfinance programs on women's empowerment. It explores whether schemes that appear to be very similar on the surface may actually hide deeper differences that can help explain their diverging outcomes. The focus is on group intermediation, a feature that is overwhelmingly present in microfinance programs targeted at women. While group intermediation clearly has paid off in terms of individual programs' financial profitability, it is also increasingly propagated on equity and empowerment grounds. This article argues that it is shortsighted to assume all forms of group intermediation will invariably achieve their empowerment potential, and it explores which factors come into play in this respect. A basic distinction is made between microfinance programs that use women's groups and existing gender relations as instruments to enhance financial sustainability on the one hand and, on the other, programs that rather exploit the capacity of credit to mobilize women, to generate and invest in collective action, and to transform underlying gender relations. This article draws mainly on insights from (critical) institutional and feminist economics and confronts them with empirical evidence from a comparative impact study of credit programs in South India that approach women's groups differently.