Do Traditional Institutions Constrain Female Entrepreneurship? A Field Experiment on Business Training in India

Strict gender norms constrain women’s entrepreneurial opportunities.


The spread of microfinance in recent years has demonstrated the constraints and barriers to female business activity and entrepreneurship. In India, women face different restrictions on mobility and social interactions, depending on their religion and caste. While Muslim women face the most restrictions, for Hindu women caste plays a bigger role, with women from upper castes facing significantly more restrictions regarding with whom and how they may interact within society. Some of these restrictions include how women interact with older men outside their own family; their ability to leave the home unchaperoned; and a veiled face in public for upper caste Hindus. For Muslims, regulations regarding women’s interactions are similar to those placed on upper caste Hindus, but stricter. Because women of lower castes are poorer and typically have to earn their own wages, there are fewer restrictions placed on their interactions, and thus they have more freedom in their decision making and with their finances. By imposing restrictions on women’s behavior, traditions, such as the caste system and religious doctrine, influence the ability of women to engage in business activity.

In this paper, researchers collected data from a 2-day financial literacy and business training session conducted in partnership with SEWA, a bank that predominantly provides financial services for poor women. During this training, women not only learned the language of finance and business, but also set financial goals for themselves and worked through how to achieve those goals with instructors. The session also included an aspirational piece in which women were able to hear others’ stories of bringing themselves out of poverty. All women randomly selected to undergo the session were both actively saving and employed. Prior to the module, women were grouped into one of three groups- Muslim, upper caste Hindu, and scheduled (lower) caste Hindu- and the strictness of each group was rated in terms of the following social norms: power to socialize unchaperoned; allowance to leave the house or community unattended; power to address elders; requisite face veil; ability to marry after being widowed. This paper describes the effect these training sessions had on socially constrained women’s autonomy over financial and business decisions.


Financial literacy trainings most greatly helped women in upper Hindu castes overcome social obstacles to their businesses, but Muslim women who were subject to the most extreme restrictions were not able to overcome these hurdles.

  • Financial literacy training increased the likelihood that upper caste Hindu women took out a business loan by 13 percentage points; they borrowed almost twice as much as the control group, yet did not borrow beyond their means.
  • The training increased business revenue among upper caste Hindu women only, suggesting that the new loans were put toward business investments. For upper caste Hindu women, the likelihood of participating in labor market activity increased by 25%.
  • An estimated 30% increase in income was observed in upper caste Hindu women, though the exact percentage was not able to be confirmed.
  • Upper caste Hindu women were more likely to discuss business with their families as a result of the training program.

In short, the financial literacy training improved business opportunities for upper caste Hindu women, but failed to affect other restricted women such as Muslims and the already lesser restricted lower caste Hindu women. The authors posed several explanations for this result, but their most accepted justification is that the program assisted women greater constrained by social norms, but Muslim women with the greatest restrictions had too little self-governance to successfully make any significant changes.


The researchers conducted two-day training sessions between September 2006 and April 2007 in collaboration with SEWA Bank in Ahmedabad, India. The training involved financial literacy and business skills, and setting a financial goal to be achieved in the next six months.

The participants were 597 women, randomly drawn from the pool of SEWA Bank customers aged 18 to 50, who had been active savers in the prior two years and were also employed. Two thirds of the women were randomly assigned to the treatment group, which received the training. The rest were assigned to the control group, which did not receive the training. The authors categorized women into three groups by surname: Muslim, Hindu scheduled caste, and Hindu upper caste. They scored how restrictive each group was on the following five norms governing women’s behavior: power to socialize unchaperoned, allowance to leave the house or community unattended, power to address elders, requisite face veil, and ability to marry after being widowed.

To ensure randomization, data was stratified by sampling period and bank branch. Data was collected through surveys conducted on a rolling basis four months after the training was completed.

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