The Paradox of Micro-Capital Fungibility: Evaluating Credit Utilization and its Impact on Women’s Empowerment

Abstract

Purpose: This study evaluates micro-credit’s contribution to women’s empowerment in rural West Bengal. It specifically examines the “paradox of micro-capital fungibility” by analyzing how the utilization of accessed impacts economic independence, mobility, decision-making, and social recognition.
Design/methodology/approach: Using a quantitative approach, primary data was collected from 450 women beneficiaries in the West Medinipur district. Statistical analyses were employed to identify patterns in credit utilization from both Commercial Banks and Microfinance Institutions (MFIs).
Findings: Results indicate that while micro-credit is a transformative tool for financial inclusion, the actual utilization (fungibility) of credit is the critical determinant of the socio-economic empowerment levels achieved by rural women.
Research limitations/implications: The geographical focus on rural West Bengal may limit generalizability. Future research should investigate the digital divide’s impact on credit utilization among less tech-savvy populations.
Practical implications: Financial institutions must move beyond mere credit delivery to monitor and support effective fund utilization, ensuring long-term entrepreneurial success for women. Social implications: This research informs policymakers on designing robust support systems that bridge the gap between credit access and effective utilization, enhancing women's social status and community resilience.
Originality/value: This paper addresses the under-explored “fungibility” of micro-capital, bridging the gap between financial access and actual empowerment outcomes.