Household level analysis of informal credit and women empowerment in India: A study of a new elixir to revamp

In India, as far as credit system is concerned, it is both formal and informal sector plays a leading role to provide the access of financial services. The formal financial sector consists of financial institutions provide credit based on professional connection. However, the informal sector (i.e. Relatives, Money lenders, shopkeepers) providing credit based on personal relation. Previous research on credit rationing determinants focused primarily on the actions of structured lenders who explicitly negotiate with an individual borrower. This paper provides an overview of the determinants of access to informal credit and the empowerment of women in India, based on survey data from IHDS-2. The results show that the area of living, caste, poverty, head of house, members of SHGs, access to media, land ownership, migration, and education of head of house were significant impact on obtain credit from informal sources. On the other, different variables like female headed house, religion, age of respondents, year of marriage, number of children, employment has close association with women’s taking decision alone on at least one activity.