Financial Inclusion, Gender Dimension, and Economic Impact on Poor Households VIGHNESWARA SWAMY * IBS Hyderabad, India Summary. — We examine the question: “In the context of gender dimension what is the evidence of the impact of the financial inclusion programs on poor households represented by women relative to that represented by men?” By constructing a good counterfactual and comparison group, we employ the difference-in-difference estimator approach with Panel Least Squares and Generalized Methods of Moments using standard errors for a robust analysis. We notice that income growth (CAGR) net of inflation effect was 8.40% for women as against 3.97% for men, indicating that the gender of participating poor undoubtedly affects the outcomes of these programs. Ó 2013 Elsevier Ltd. All rights reserved. Key words — financial inclusion, program evaluation, panel data, government policy and regulation, economic development and financial markets, institutions and growth 1. INTRODUCTION This study has explored whether schemes that appear to be very similar on the surface may actually hide deeper differences that can help explain their diverging outcomes. The focus is on group intermediation, a feature that is overwhelmingly present in microfinance programs targeted at financial inclusion (FI) of women. While group intermediation clearly has paid off in terms of individual programs’ financial profitability, it has also increasingly propagated on equity and empowerment grounds. However, some of the literature has presented some mixed findings in contradiction to the established view point that financial intermediation programs aid in economic uplift- ment of the poor families owing to women participation (for example; Kabeer, 2001; Montgomery & Weiss, 2011; Mosley, 2001; Navajas, Schreiner, Meyer, Gonzalez-Vega, & Rodri- guez-Meza, 2000) which motivated a detailed analysis. This study draws mainly on insights from institutional and feminist economics and confronts them with empirical evidence from a comparative impact study of FI programs in different regions of India. Evaluations of the effects of FI programs on women’s empowerment have generated mixed results. While some are supportive of FI programs’ ability to induce a process of eco- nomic, social, and political empowerment, others are more skeptical and even point to a deterioration of women’s overall well-being. Against this background, development scholars and practitioners have sought to distill some of the ingredients that might increase the likelihood of empowerment or at least reduce adverse effects. We examine the significance of gender dimension in FI through microfinance in the economic up-liftment of poor households in India. Using household survey data from select states of India, we explore the importance of the borrower’s gender in the context of the impact of financial programs. To find appropriate answers for the research question the study hypothesizes that there is significant change in the eco- nomic living of the poor households owing to the participation of women in the FI process through informal financial inter- mediaries like the self help groups (SHG) and other related FI programs. We investigate the level of impact of FI pro- grams on the participating poor in the context of gender dimension particularly on five parameters of economic well-being namely; (i) changes in annual income, (ii) changes in annual expenses toward to food security, (iii) changes in an- nual expenses toward living standards (non-food expenses of the household), (iv) changes in annual (economic) production levels, and (v) changes in annual (income generating) asset cre- ation levels. We report the impact in terms of figures that are net of inflation effect. The study apart from estimating the im- pact in general, endeavored to detail the analysis by consider- ing the impact analysis on three broad social categories 1 in India viz; (i) scheduled castes/scheduled tribes (SC/ST) catego- ries, (ii) other backward classes (OBC) categories, and (iii) general (GEN) categories. The significant contribution of this study to the literature can be appreciated from the backdrop that though there is a fairly high degree of disagreement on the impact of FI pro- grams on the extremely poor and women, which we opine are due to flaws in the impact assessments and about the con- cept of empowerment. This study establishes with appropriate impact assessment techniques and a large sample from differ- ent regions and appropriate study period that FI programs undoubtedly impact the economic lives of the women particu- larly in rural areas and greatly motivate them in securing food for the households and ensuring relatively improved standards of living particularly in the case of deprived sections of the society. It is not only women who get impacted but the poor irrespective of gender too get significantly impacted because of the FI programs. The remainder of the paper is organized as follows. In Section 2, we provide the related literature review and present theoretical considerations for our conceptual framework for the analysis. Section 3 outlines the FI scenario in India. Section 4 explains the research design and methodology describing the study area, control groups, data collection approach as well as the econometric approach employed for the analysis. In * I would like to thank anonymous referees and the editor-in-chief of this journal for their insightful comments and suggestions in strengthening this paper. Any remaining errors are, of course, my own responsibility. The author would also like to express gratitude to a number of financial inc- lusion program beneficiaries who provided the much needed primary data for this research. Final revision accepted: October 14, 2013. World Development Vol. 56, pp. 1–15, 2014 Ó 2013 Elsevier Ltd. All rights reserved. 0305-750X/$ - see front matter www.elsevier.com/locate/worlddev http://dx.doi.org/10.1016/j.worlddev.2013.10.019 1