REDUCING POVERTY AND EMPOWERING WOMEN THROUGH MICROCREDIT: A MALAYSIAN PERSPECTIVE

Abstract

Microcredit was introduced to provide small loan to the poor, especially women, to become self-employed by engaging in micro-entrepreneurship. This small loan allows the poor to create income-generating activities that help them achieve economic independence. However, despite the widely claimed positive impact of microcredit on poverty reduction and women's empowerment, some studies have discovered a negative impact of microcredit on the beneficiaries. In view of this, this paper is intended to review whether the literature supports the role of microcredit in achieving such goals of poverty reduction and women's empowerment in Malaysia. The literature was generated from three electronic databases, which are Scopus, Science Direct, and SpringerLink, by using the following key search terms: microcredit impact, microcredit on poverty reduction, and microcredit on women's empowerment. All papers reviewed were from 2010 to 2024, and only studies that have been carried out in Malaysia were selected. We identified 68 articles; however, only 15 articles were selected to be reviewed based on the inclusion criteria. We found that microcredit has successfully delivered a positive impact on poverty reduction and women's empowerment. However, the review highlighted the importance of implementing a rigorous approach to measure the impact of microcredit on income increment. Meanwhile, the measurement of women's empowerment should integrate all dimensions of empowerment to avoid bias in the outcomes.