Investigating the Relation Between Microcredit and Female Entrepreneurship in Lao PDR

Abstract: Even though the idea of microcredit is to stimulate entrepreneurial activities in developing countries, there is an ongoing debate whether this is achieved. Many argue that only providing credit is not enough and see a need for additional components in promoting entrepreneurial activities for the stimulation of economic growth. Moreover, the importance of including women in economic development is widely acknowledged. In Lao People's Democratic Republic where many women run their own businesses and a majority of microcredit borrowers are women, we aimed to examine the relation between microcredit and female entrepreneurship. This was accomplished by conducting semi-structured interviews with 13 Laotian female microcredit borrowers running businesses, as well as interviews with seven representatives from organizations related to microcredit and female entrepreneurship. To understand the female entrepreneurs and the environment in which they operate, we developed a model where factors related to the loan agreement, networking, motivation, gender division of labor and training were identified as important components in the context of Lao PDR. The results support the view that a credit only approach is not enough for the development of female entrepreneurship in Lao PDR.