Poverty and micro credit : a multidimensional impact study on indigenous women in rural Guatemala

Abstract: The high level of economic inequality in the world today is an unacceptable. The poor people of the world lack several essential services, one of them being financial services. In order to achieve economic growth and higher incomes, capital investments are a key determinant. For capital investments to take place, the availability of credit is of outmost importance – but this is usually what poor people lack. In the fight against poverty, micro finance has become an increasingly popular option amongst western donor agencies. There are scientific studies analysing the impact of micro credit, studies which several cases show a positive correlation between the work of micro credit institutions and positive effects on multidimensional aspects of poverty. Guatemala is a country that ranks below average on most social indicators within Central America. The economic inequalities are enormous, leaving the indigenous Maya population far behind. With this point of departure, this master's thesis and Minor Field Study aim to measure the impact of micro credit on indigenous women in a village in the poorest region of Guatemala. Its purpose is to capture how the economic capacity has changed over time due to micro credits from a micro finance institution. In order to obtain a multidimensional picture of their situation, four additional related aspects are examined – political capacity, social capital, human capital and gender equality. In addition, a correlation analysis of the inter-relation between these aspects and economic capacity is carried out. The results are two-sided demonstrating no general correlation between time and economic capacity, nor the four other aspects. The variables that increase with time are: construction of their houses of today, the quality of the clothes and political capacity. The reliability of the data is, however, somewhat questionable. In analysing this, a contribution is made to the ongoing discussion on how to perform impact studies on micro finance institutions as well as on how different aspects influence each other.