An Empirical Analysis of Linking Financial Inclusion with Rural Women's Empowerment through SHGs

Abstract Women’s empowerment through microfinance has gained prominence as a strategy for inclusive development, yet evidence on its multidimensional outcomes remains context-dependent. This study examines socio-economic characteristics, institutional performance, livelihood outcomes, and empowerment effects of Self-Help Group (SHG) based microfinance among rural women in India. Using a descriptive–explanatory cross-sectional design, primary data were collected from 120 SHG members with at least two years of participation. Stratified sampling ensured representation across NGO-, cooperative-, and government-promoted SHGs. Data were gathered through structured interviews and analysed using descriptive statistics and composite indices. Findings indicate that SHGs predominantly include economically active women from modest-income households engaged in wage labour and small-scale enterprise activities. Institutional performance is strong, reflected in regular savings behaviour, high leadership satisfaction, transparent bookkeeping, and sustained membership participation. Microfinance access has significantly improved financial inclusion, with a majority of members reporting increased income, enhanced savings capacity, and access to credit, though entrepreneurial transformation remains moderate due to limited credit availability and training. Empowerment outcomes are notable across financial, social, and psychological spheres. High involvement in decision-making, control over expenses, improved mobility, and digital financial literacy indicate increased agency. The Women Empowerment Index shows participants experience high empowerment, confirming SHGs support both capabilities building and social transformation. However, lower public confidence and limited enterprise expansion highlight the need for more institutional support and capacity-building. The study concludes that Self-Help Group (SHG)–based microfinance represents a comprehensive mechanism linking financial inclusion with livelihood improvement and gender empowerment. Policy measures enhancing credit adequacy, skill development, and institutional capacity can further strengthen SHGs as sustainable engines of inclusive rural development and women’s empowerment.