Topic: MICROFINANCE -THE PROMISING AND COST-EFFECTIVE TOOL FOR POOR IN

TAMILNADU, INDIA

Research Question: What is the effectiveness of microfinance in mitigating the poverty amongst the
poorest of the poor rural women in Tamil Nadu, India?

Research Problem:

Micro-finance has risen as new millennium tool for elimination of poverty in a decade ago.
The advocates of microfinance argue that it can resolve the issue of poverty by offering poor
individuals micro saving credit (small loans) and other financial services like micro-savings and
micro-insurance. According to a noteworthy World Bank Study of global microfinance schemes,
there are in excess of 900 such micro-finance institutions in 101 countries that offer micro credit to
poor people. A sample of 206 of these 900 institutions demonstrated an aggregate loan portfolio of
almost $7 billion, representing to more than 14 million small loans to individuals and their
organizations, 53% of whom dwell in rural areas around the world. Microfinance service is
advertised as poverty alleviating equipment with a respectable objective, however, potential business
opportunity.

As micro-finance projects and organizations have turned into an imperative element of

strategies to reduce poverty and empower poor women beneficiaries; the analysis of result gets to be
inevitable for development agencies and the donor community. At one end, it has been found that
microfinance services have positive financial effects and brought about empowerment of poor
women while on the other hand, research studies have demonstrated negative effects and
disempowerment of women borrowers. Analyzing these sorts of perceptions, the assessment of
microfinance services becomes a significant issue for researchers and academicians. In this manner,
the present research work is done to investigate the effect of microfinance on empowering of poor
women borrowers in the state of Tamil Nadu. The statement of the issue, therefore, is Microfinance
and empowerment-An Investigation of Tamil Nadu.

Literature Review:

(Rutherford, 1996) pointed out that arrangement of finance related administrations to poor
individuals require not only be for expanding income, empowering women, or starting business it might
just aim to help them "manage better what little money they already have". (Puhazhendhi, 1999) analyzed
the working of SHGs in terms of sustainability, empowerment of women, the financial impact on the
individuals' and future potential and so on. The study revealed that SHGs in Tamil Nadu are performing
admirably towards social change and change. (Sathish.p., 2001) found that care should be taken to
guarantee homogeneity of socio and economic status of the members while shaping SHGs. The
arrangement of SHGs must be systematic. He also emphasized on the spread of SHG project all through
rural India rather than regional the concentration of SHGs. (Manimekalai & Rajeshwari, 2000) An
overview was directed in the rural zones of Tamil Nadu on 150 SHG members to assess the effect of SHG
on women entrepreneurship. It was observed that SHGs have helped the rural women to begin micro
ventures including farm and nonfarm activities, trading and service units. (Singh P.K, 2001) analyzed the
pre-and post-SHG circumstance on women SHGs in Uttar Pradesh. A positive impact on assets value and
yearly salary was found. The average estimation of assets expanded by 46% and yearly salary per family
beyond yearly salary per family unit by 28% amongst pre-and post-SHG period. (Sheel, et al.,
2002)Present a contextual analysis of the Thrift and Credit Scheme created by NGO Shramik Bharati.
This NGO gave poor ladies an entrance to formal credit, preparing and specialized help through the
arrangement of SHGs. It was found in the study that 60% of the women reported an increment in the
month to month salary and professional efficiency also, 42.2% borrowers felt positive about maintaining
the business without further assistance from NGOs. (Vijayanthi, 2002) Examined a group development
project in Tamil Nadu on control of Diarrhoeal Disease through water and sanitation in the year 1996-99
in 5 slum areas of Pulianthope in Chennai. 1018 women of 25 SHGs were met wherein 10% of the ladies
demonstrated a positive outcome between their insight and basic leadership control for group issues in
regards to water and sanitation and were active decision makers related to health. (Shobha,
2008)attempted to evaluate the problems of self-employed women. This study took over 400 self-
employed women as sample from Coimbatore Municipal Corporation Range and used scaling technique.
And this study concluded that the issues faced by the beneficiaries of Prime Ministers Rozgar Yojana are
less severe than non-beneficiaries. (Vasanthakumari, 2008) made an undertaking to examine the role of
micro enterprise in empowering women in Kerala. The author took a sample of about 328
microentrepreneurs. This study acknowledged that these enterprises widely helped in empowering rural
women financially, socially and individually. The study also suggested giving priority to commercial
viability of enterprises. (Kumararaja K, 2009) made an effort to appraise the performance of SHGs in
Tamil Nadu. The study recommended the progress of SHGs in India and Tamil Nadu. It exposed that
there has been a constant progress in the number of SHGs and amount of loan approved. The study
terminated that a prompt and regular check of the micro credit through SHGs will contribute to a healthy
rise and to the overall empowerment of rural women. (Saraswathy, et al., 2009)have analyzed the major
role of micro-finance in Krishnagiri district. They also highlighted the role of Government of India,
NABARD, NGO and banks. The questionnaire was designed and presented to 75 members of 16 SHGs
and 9 NGOs. The study acknowledged that majority of members agree to the point that their income has
highly increased after joining SHG. It concludes that SHGs have become the development diplomat of
villages. (Phougat & Hooda, 2010) stated that there is short-fall of diversities in the Self-Help Groups
activities in the State. The maximum amount of resource has been spent on primary sector and especially
on milk cattle. Their attention has given in other areas such as handlooms, handicrafts and other activities
in the State. The issue of marketing of the goods by Self-Help Groups is a large constraint in achieving
the targets. So, there is necessity for proper attention to solve these types of problems under SGSY.

Research Objective:

Any social or economic research may have two goals Academic Objective and Utilitarian
Objectives. An urge for learning is the fundamental element of academic research and the other
objective of the research is utility oriented. The present research work is directed to serve the
previously mentioned targets in two ways; first, it concentrates on how microfinance programs
function, how they affect arrangement and members by focusing Indian microfinance industry.

Besides, it reveals the effect of microfinance projects on two areas viz. family unit and person
which gives an extended view to the existing literature in micro-finance field.
The main goal of the research is to investigate the impact of micro-finance interventions on
empowerment of women participants living in TamilNadu (India). Along with the main goal, the
auxiliary targets of the exploration are as per the following:

1. To analyze the impact of microfinance program on participants' annual household income.

2. To analyze the effect of microfinance program on participants' annual household expenditure.
3. To assess the effect of microfinance mediations on households asset position.
4. To assess the effect of microfinance interventions on households savings.
5. To concentrate the effect of microfinance interventions on participants well-being.

Research Design:

A research design is a strategy determining the techniques and systems for gathering and
breaking down the required data. It is a framework or blueprint that plans the action for the research
project. Selection of research for present research work is influenced by the research objectives,
availability of data sources and the cost of obtaining the data. One can categorize research plans into
three classes: Descriptive, Exploratory, and Causal. The present study is descriptive and exploratory
in nature.

An exploratory study would be an exact tool for gaining insight into the feelings and
perceptions of the loan recipients and other adult members in the household, once microcredit enters
their household. In another context, there is a need to capture the lived experience from the
perspectives of those who create meaning from it. A field experiment method of inquiry permits one
to understand the procedure of progress, if any, in the role and status of women, as perceived by the
loan recipients themselves and as perceived by the other adult individuals in their family.

Research Methodology:

Target Population:

The target population includes specific, complete group relevant to the research project. Here
the question "To whom would we like to talk?" should be answered. The principal objective of
present research work is to analyze the impact of microfinance interventions on empowerment of
women participants living in TamilNadu. Accordingly, the target population, hence, include all
women (over the age of 18) who have worked in various SHGs and profited microfinance benefits in
urban zones of TamilNadu.

Sampling and Data Collection Procedure:

For sampling purpose, at first stage, six different cities of Tamil Nadu viz. Coimbatore, The
Nilgiris, Erode, Karur, Trichy, Vellore were chosen to draw the sample for the research. The goal was
to have heterogeneous sample representing to various urban zones of TamilNadu state.
 In the second stage, the minimum sample size required for research work was resolved and based on
the exact calculations the actual sample was finalized by taking sample size more than the minimum
required criteria. To find the minimum sample size required for the research work, the proportion of
observations to indicators and the formula based approach were used. According to (Hair, et al.,
2009) the maximum number of independent variables used in different regression models in this
research work was 8 and therefore the minimum sample size (number of observations) would be 160
(208).

The minimum sample size of the research can be decided by using the following formula (Nargundkar,
2
2010): n=pq ( z / )

As said by (Ruby, 2008)By assuming the rate of very high level of empowerment of women was 33.5%.
So also, the nonoccurrence of empowerment i.e. q = 1 p would be 75%. The certainty level accepted in
the research work is 95 percent and in this manner estimation of z would be 1.96. The tolerance level of 87
error is evaluated to be 5% for present research work. The sample size is calculated to 288.

The researcher, after considering minimum sample size requirement of 160 and 288, decided the sample
size of 460 for present research that rationalizes representation of target population. The details of the
number of respondents from six urban communities of TamilNadu are given in the table

S.NO NAME OF CITY NO. OF RESPONDENTS

1 Coimbatore 100
2 The Nilgiris 80
3 Karur 60
4 Vellore 100
5 Trichy 60
6 Erode 60
Total sample size 460

In the third stage, the questionnaire is being prepared in English and the native language. Thus, this
questionnaire acts as a primary source of data in this research. And the random people from different
microfinance institutions was personally interviewed and asked questions personally. Secondary data
from official websites, journals, magazines and articles and organizations like NABARD,
BRLPS, WDC, and NIDAN Etc.

Questionnaire Design:

The questionnaire was separated into three sections: The initial segment of survey
manages women empowerment in detail. There are 43 questions that address the degree of
women empowerment. Out of which 29 questions are dichotomous questions (yes or no) and
remaining 14 question are categorical. It additionally contains five questions distinguishing with
the positive or negative effect on microfinance organizations on prosperity, the way of life,
yearly wage and use of beneficiaries family.

The second portion of survey addresses the impact assessment of microfinance services
in detail. The third part of the questionnaire includes general data and is partitioned into five
sections. The first segment is related to information identified with individual data (i.e. women
respondent). It incorporates questions identified with work participation of women, income level,
contribution of income in household, education, religion, marital status, age difference between
husband and wife and number of children. The second part is related to family data. It
incorporates type of family, the number of family members, the number of family members
occupied with income generating activity etc. The third part is related spouse's business
information that includes education, employment, monthly income and subsidiary employment.
The fourth part is related to household information and the respondent is asked some information
about the kind of house she lives in and different facilities like power, toilet facility, source of
drinking water, size of agricultural land (assuming any), fuel for cooking and so on. The last part
is related to self-help group. It incorporates questions relating to the name of SHG, its size,
number years of participation and assignment of women respondent in SHG.

Research Ethics:

Before setting out on interviews, administering the research instrument (questionnaire), and
other data collection technique suitable for this review, permission will be sought from significant
individuals and divisions of agencies to be tested. This is to avoid unauthorized acquisition of
information and rights infringement. The researcher intends to avoid the request for names of
respondents, as this won't frame the reason for dissecting the examination instruments. Financially
sensitive information will be taken care of with most extreme discretion and for the analytical reason
only. This will shape a portion of my proposal to relevant organizations whose staff I plan to look for
information and reports for analysis in order to facilitate my discoveries.

Time Scale:

To ensure viability, the research has been divided into stages, to give a clear thought of the
duration of the study. Because of unforeseen occurrences, it is feasible for this review to take longer
than anticipated. However, some 'slippage time' has been composed into this review to guarantee
viability.
No. Activities 2016 2017
2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6
1. Literature review
2. Analysis of the existing study
3. Submission - research proposal
4. Research proposal- presentation
5. Questionnaire
6. Preparation of checklist
7. Site assessment using the above checklist
Information collection and statistical
8.
analysis
9. Analysis & evaluation
10. Project presentation
11. Writing up
12. Final editing of thesis
13. Final thesis submission

Resources:

A researcher will require the some of the resources, to ensure the timely success of the research
project:

A laptop computer for publishing reports

A functional mobile internet modem for online research

Assistance from staff of local government and microfinance organization to gain access
to data

An electronic voice recorder to conduct the interviews

Wages for travelling and accommodation

Finance to facilitate mobility (i.e for printing questionnaire and so on).

References:
Hair, W., C. B., J, B. B. & R., L. A. R. E. a. T., 2009. Multivariate Data Analysis.
NewDelhi: Pearson Education.

Kumararaja K, 2009. Kumararaja K, Performance of SHG in TamilNadu. Southern

Economist, 47(19), pp. 14-16.

Manimekalai, M. & Rajeshwari, G., 2000. Empowerment of Women through Self Help
Groups(SHGs). pp. 74-87.

Nargundkar, R., 2010. Marketing Research:Texts and Cases. NewDelhi: Tata McGraw
Hill Pvt.Ltd.

Phougat, S. S. & Hooda, S., 2010. Swarnajayanthi Gram Swarozgar Yojana.

Southern Economist, 48(41-44), p. 20.

Puhazhendhi, 1999. Evaluation Study Of SHG's : Important Findings Of Evaluation

Study InTamil Nadu. Lucknow, BIRD.

Ruby, J., 2008. Microfinance and Women Empowerment A Study of

Kudumbashree, s.l.: s.n.

Rutherford, 1996. Money Talks: Conversations With Poor Households In Bangladesh

About Managing Money. s.l., s.n.

Saraswathy, A., Porkodi, S. & M. Bhuvaneswari, 2009. Micro-finance in Krishnagiri

District. Indian Journal of Marketing, 39(5), pp. 47-57.

Sathish.p., 2001. Some Issues In the Formation of SHG'S. Journal of agricultural

economics, 56(3).

Sheel, Ranjama, Krishna & Sangeeta, 2002. Towards women's empowerment role of
Self Help Groups and Micro-credit. philosophy and social action, pp. 23-39.

Shobha, K., 2008. Problem of Self Employed Women: An Analysis. Southern

Economist, Volume 47.

Singh P.K, 2001. Singh P.K, (2001)Impact of Self- Help Groups on the Economy of
MarginalizedFarmers of Kanpur Dehat District of Uttar Pradesh. Indian Journal of
Agricultural economics, Volume 56, p. 463.

Vasanthakumari, P., 2008. Women Empowerment through Micro Enterprise

Development. Southern economist, 47(15), pp. 31-34..

Vijayanthi, K., 2002. Women's Empowerment through Self-Help Groups:A

Participatory Approach. Indian Journal of Gender Studies, pp. 263-274.