It Takes a Village to Do Microfinance Right: Effects of Microfinance on Gender Relations in Bali

Debates on whether microfinance remains an effective measure to eradicate poverty and empower women have continued with a bigger question of if an alternative model is available to outweigh the problems of group-based solidarity-based lending scheme. This dissertation aims to study if and how a Lembaga Perkreditan Desa (LPD) – a community owned microfinance – affects women's agency in household and society, and most importantly to observe if it has long term effects on the reconstruction of gendered roles and relations.

This study employed participation observation and semi-structured interviews for data collection because each method allowed the exploration of multi layered information and tacit values that other data collection methods do not provide. I spent four months conducting participant observation with female LPD clients from four villages and eight semi-structured interviews around Bali.

This study concludes that social capital affects LPD's performance. Impacts of social capital on LPD are posited to occur through the immersion of LPDs into the village governance system that renders members' loyalty, trust, and respect, and the adoption of shared customary laws to name a few. LPD is also proven to strengthen social capital by increasing interdependence among community members; boosting the members' sense of belonging, trust, and responsibility for community development. However, LPD does not necessarily foster women's social capital.

This study also found that access to LPD corresponds to women's agency in the household decision-making process. Three features of cooperative decision-making in household are 1) the ability to switch roles in the loan application process, 2) any LPD related financial decisions will involve women's opinion or approval in it, and 3) women have the control over the allocation and repayment of the loans from LPD. Furthermore, I argue that LPD facilitates women's social mobility by ensuring that their access to LPD remains intact. Moreover, LPD causes intergenerational impacts when women are involved in the lending-saving mechanism. Lastly, this study argues that LPD has long-term effects on the reconstruction of gendered roles and relations in Balinese society.