UNDERSTANDING THE CHALLANGES OF FINANCIAL INCLUSION OF RURAL WOMEN´S ENTREPRENURSHIP

Guillermo Adolfo Bornemann

Bangalore, India, 2018

Outline

1. Introduction

2. Research questions

3. General characteristics of the census

4. Methodology

• Logistic Regression  Model

• Multivariate analysis

Financial systems are based on the selection of the best recipients of credit, underthe hypothesis that this generate a virtuous circle of growth, taking advantage ofproductivity and investment as transmission instruments for efficient distribution,with positive consequences for the relationship between the financial system andeconomic growth (King & Levine, 1993).

1. Introduction Part I

The idea of selectivity is one of the reasons why we are interested in addressing theproblem of restrictions and inclusiveness of rural credit from a gender perspective.

Women do not only have to face the restrictions of being a credit subject throughthe different credit policies (term, rate, amount, payment methods and mortgage),but they also have to deal with the restrictions on the gender condition of theirsocial environment.

According to experts, the restrictions cause an inefficient allocation of resources(Rodríguez & López 2009). Maciel Morfin points out that microcredit operate withviability criteria that are closely related to high rates and a strong demand forcompliance with deadlines (Morfin M, 2009).

1. Introduction Part II

The challenge: Finding the factors that have some influence on certain behaviors, such asthe desire to start a new project, gender empowerment, and restrictions on access toservices and resources from a woman's perspective, are all issues that social research hasbeen addressing.

The challenge of development programs involves first of all unraveling the nature of suchrelationships, so that multivariate approaches such as different types of logistic regression(LR) can be useful tools when faced with various causal assumptions of behavior, such asthose mentioned above.

One of the critical elements of the research is to have a prospective vision of the set ofvariables that can contribute to explain such complex phenomena as empowerment orrural entrepreneurship from a gender perspective.

On these aspects, we would like to share some ideas about to open ourdiscussion:

First: The study from a gender perspective regarding the restrictions facedby women has generally focused on aspects such as the conditions underwhich microcredit‐alone programs have been designed (term, interest,guarantees, distances in rural areas, others).

This is indeed part of the problem and it is possible to follow it through thevarious research that have already been elaborated.

1. Introduction Part III

A research approach that has acquired greatrelevance is the one interested in analyzinghow the set of networks and theentrepreneur's relational capital have adecisive influence on the creation andsuccess of new companies (Kantis et al.,2004; Capelleras and Greene, 2008;Capelleras and Kantis, 2009). Local culture,values, the home and family dynamics,empowerment as a relational expression ofthe heads of household (inside approach).

Second: The issues noted above also have implications for the constraints women face inundertaking entrepreneurship initiatives, but research on entrepreneurship andempowerment has generally focused on issues outside the home.

It is from this separation of the causal factors (external and internal) that influence thosethat deserve our attention in this discussion.

Therefore, it seems prudent to us to start making a difference that is not alwaysappreciated that consists of separating the dynamics of the home in the relationships thatare built between the members of the family (intrahousehold dynamics) and therelationships of the household members with community dynamics.

The following examples show some studies in the field of application of logisticregressions, neural networks, Bayesian applications, factorial analysis among others.

1. Introduction Part IV

For this reason, the focus of the research are the following questions:

• Do individual characteristics and the insertion in intra‐household and community dynamics affects access to credit in rural areas? 

• How different are entrepreneurships in rural areas in terms of the sector they are inserted, market connections, skills requirements, scale, origin, and growth dynamic?

2. Research questions

Table No.1 Total population in the territories of Rio Blanco, Nicaragua under study

3. General characteristics of the census

The household census for rural communities in the municipality of Rio Blanco consist in:• Core questioner: XVIII sections to measure poverty and SDG• Rider questioner: for thematic studies focus on entrepreneurship and financial inclusion

the rider is integrated for III sections:• Entrepreneurship: Answer by the household head (woman or men)• Access to credit: Answer by the households head (woman or men)• Credit and intrahousehold dynamic: Answered only by woman

Territory Total Households

Total Population (census)

Total number ofentrepreneurships

Total woman who wants to undertake 

an economic activity

Total population with access to credit

Tawa 400 1548 6 34 12Wanawás 974 3451 29 91 68

Cuatro Esquinas 861 3365 12 83 43Total 2,235 8364 47 208 123

The study carried out in the municipality of Rio Blanco Nicaragua, involved a total of 1877 dwellings, 2,335households for a total of 8,364 people in the three comarcas.

3. Methodology

Research Question 1: Do individual characteristics and the insertion in intra‐household and community dynamics affects access to credit in rural areas? 

• Logistic regression model

• Interview financial services providers

• Gender policies

• Support programs

• Cases studies (10 cases) for women who have and don't have access and entrepreneurship.

• Further the analysis on socio‐economic aspects of the household and they as individuals

• And the factors that restricts their access to credit and entrepreneurial activities .

4. Methodology

• Logistic regression model

One of the aspects that make discrete response models convenient is the possibility of discretized quantitativevariables , having the capacity to evaluate the qualities of the variable.

For its transformation, codes are commonly used and incorporated into the model. Depending on theirtransformation, these variables can be binary or multiple response variables. Once the next step has beentransformed is the choice of the accompanying probability function, it is possible to determine the type of model(Truncated Linear, Logit or Probit).

Using regression analysis results useful for the purposes of our research from the perspective of predicting thepresence or absence of a characteristic (we treat the probability of occurrence of measuring a given event (Y = 1)).

We will analyze the access to credit not only by external factors (credit policies) but by the internal factors (individualcharacteristics, intrahousehold and community dynamics).

The analyzes arising from this type of tools are probably one of the most used multivariate analyzes in social sciencesand life sciences due to their versatility to measure and predict patterns of human behavior. (Cox and Snell, 1989;Hosmer and Lemeshow, 1989; Ryan, 1997)

4. Methodology 

Research Question 1: Do individual characteristics and the insertion in intra‐household and community dynamics affects access to credit in rural areas? 

METHODOLOGY

Logistic regression model

𝑷 𝒀𝒊 𝟏 𝑿𝒊𝐞𝐱 𝒑 𝑿𝒊𝜷𝟏 𝒆𝒙𝒑𝑿𝒊𝜷 𝒊 𝟏, 𝟐, … , 𝒏

We are interested in the conditional distribution of Y,   given its characteristics, what is the probability that the individual i takes an action (Yi = 1)

DATA REQUIREMENTS Credit holder

Individual characteristics 

Gender Age  Marital Status  Illiteracy  Education  Work  Self‐employed Insertion in intra household dynamics 

Land ownership

Assets ownership 

Cattle ownership

Income management

Partner agreement to have a credit 

Partner agreement to leave to house 

Partner agreement to participate in a training session 

Community dynamics 

Organization Member 

Social program  

𝑌 1 person had access to credit and

𝑌 0 𝑃𝑒𝑟𝑠𝑜𝑛 ℎ𝑎𝑑 𝑛𝑜𝑡 𝑎𝑐𝑐𝑒𝑠𝑠 𝑡𝑜 𝑐𝑟𝑒𝑑𝑖𝑡

n is the number of observations (HHH and HHH spouse; 3,953)

k is the number of explanatory variable

𝑋 represents a n k matrix 𝑛𝑥𝑘The set of explanatory variables will be constructed as: 

𝒌 𝒙 𝒚 𝒛

x: individual characteristics variablesy: insertion in intra household dynamics variablesz: insertion in community dynamic variables

4. Methodology

Research Question 2: How different are entrepreneurships in rural areas in terms of the sector they are inserted, market connections, skills requirements, scale, origin, and growth dynamic?

Sector they are inserted Markets connections Skills requirements Scale Origin of the entrepreneurship Growth dynamic  Entrepreneur gender Limitations Technical assistance requirements

Methodology  Data requirements

Descriptive analysis to characterize the 47 entrepreneurship activities

Multivariate analysis to characterize the208 entrepreneurship activities thatwoman want o undertake

Principal component analysis andMultiple Correspondence Analysis

Cluster analysis to create a typologyof rural household’sentrepreneurships.

Characteristics of women who intend to start a business

Characteristics of the activity to be undertaken

Type of activities

Inicial capital

Technical assistance required.

Intrahousehold dynamics

4. Methodology

Research question 3: How relevant are more integrated support programs, combining technical assistance andcredit, to sustainably promote the growth of micro and small entrepreneurs, especially woman entrepreneurs?

We will not be able to address this research question due to data limitation.

We found a confusion on some person considers as technical assistance, for example the visit of the creditofficers to fill credit form, in this would biased our results.

However, we would analyze the needs of technical assistance for woman that wants to undertake a neweconomics activities.