Constraints to female entrepreneurship in Pakistan: The role of women's goals and aspirations

Project Active from to Firms

Evidence on the impact of microfinance loans on business outcomes shows moderately positive, but not transformational effects especially for women.  This is true even when access to finance is coupled with business training, suggesting that factors other than credit and knowledge constraints reduce women’s ability to start or grow a business. Recent studies have documented the effectiveness of peer support, personal initiative training and the possibility of improving aspirations of female entrepreneurs.

We will run a framed field experiment to test two potential explanations for the failure of standard microfinance loans and training to spur female entrepreneurship. First, it is possible that a lack of successful role models and support from social network hamper the belief women have in their chances of reaching their goals and more generally discourages them from even trying. Second, women may encounter obstacles that they unprepared for and cannot overcome with motivation alone.

The study will be conducted with a group of female borrowers at the National Rural Support Programme, Pakistan. Pakistan represents an interesting setting for the project, given the low levels of female labour force participation (22%) primarily due to lack of social acceptability of female economic activities conducted outside the household.

We will influence aspirations through documentaries of successful local role models who used microfinance loans to set up and expand their business and the ability to foresee and overcome obstacles through action planning and implementation intentions techniques. A randomly selected group of female borrowers at NRSP will be shown documentaries of successful role models soon after loan disbursement. To another group of clients, we will show the documentary and administer a goal-setting and implementation intention exercise. Finally, a third group will only be shown a placebo video. We will measure if business investment and outcomes vary across intervention arms and the placebo group.