Developing an Empirically Grounded Theory of Microfinance Impact on Women’s Economic Empowerment in Northern Nigeria

Microfinance impact on women's economic empowerment in Northern Nigerian contexts is characterised by specific cultural, religious, and institutional factors that global microfinance impact frameworks inadequately theorise, creating a significant gap that this study addresses through original theoretical framework development and rigorous empirical testing. This study develops an empirically grounded theory of microfinance impact on women's economic empowerment in Northern Nigeria, grounded in feminist economics, capability approach theory, and social embeddedness theory. The theoretical framework identifies three original mechanisms through which microfinance produces or fails to produce empowerment: the direct economic capability channel, the social network channel, and the household bargaining channel, each moderated by purdah norms and religious community structures unique to Northern Nigerian contexts. The framework generates testable propositions about condition-specific empowerment outcomes that extend existing microfinance impact theory. Empirical testing was conducted using a quasi-experimental difference-in-differences design with propensity score matching, utilising a primary survey of 800 women in Kano, Sokoto, and Adamawa States, split between microfinance bank clients (treatment) and matched non-clients (control). Women's economic empowerment was measured by a composite index covering business income, asset ownership, financial decision-making autonomy, and mobility. Results confirm significant positive effects of microfinance on income (ATT = 28,400 Naira per month additional income, p < 0.01) and asset accumulation (ATT = 0.31 standard deviations, p < 0.01), but null or negative effects on decision-making autonomy in communities with strongest purdah norms. The study makes an original theoretical contribution by formally incorporating cultural institutions into microfinance impact theory. Keywords: microfinance impact, women's economic empowerment, Northern Nigeria, capability approach, difference-in-differences