Globally, the gender discrepancy between men and women is not considerable, but women have less authority. According to Bill Clinton (cited by Sohail, 2014), women perform 66% of global work, produce 50% of global food, yet earn only 10% of global income and hold 1% of global property. Around 70% of the world’s destitute are female (Singh et al., 2022). Additionally, women are stigmatized and often have trouble obtaining loans in the formal sector, owing to the requirement for substantial collateral (Wondimu et al., 2023).

Women empowerment and microfinance have been acknowledged as essential developmental instruments for combating poverty among women, particularly in emerging nations (Singh et al., 2022). Women are a vital element of society, and as such, the development of society is impossible without their involvement. Empowering women increases their involvement in the labour force and decision-making processes, reduces poverty, and greatly increases their contribution to national income and development in their countries.

Microfinance institutions’ services are vital tools to create social and psychological facilities for clients, including improvements in self-confidence, enhancing education, health facilities, and leadership capabilities (Gnawali, 2018). Microfinance is a no-collateral loan given to the poorest people in rural areas where traditional banks have disregarded these communities due to a lack of collateral and regulatory systems that make borrowers’ loan repayments exceedingly difficult, if not impossible (Abebe et al., 2023).

Microfinance services also benefit women and play an essential role in their empowerment. Economic empowerment is designed to generate increased self-esteem, respect, and other forms of empowerment for women beneficiaries. More specifically, microfinance services as development organizations are to service the financial needs of un-served or underserved markets as a means of meeting development. It includes reducing poverty, allowing them to earn an independent income, empowering women or other disadvantaged population groups, and creating employment (Tariq and Sangmi, 2019).

The contribution of household income has a significant effect on economic development and has changed the living standards of millions of people in the world, especially women in developing countries (Ayam et al., 2020). Developing countries have had effective microfinance to increase incomes, improve saving capacity, and give women control over resources (Kumari et al., 2019). Microfinance is one of the dominant institutions to reduce poverty in developing countries, where women lack financial resources, live in rural areas, and live below the poverty line, all of which are critical for women’s empowerment and the ability of women (Sharaunga et al., 2019).

Microfinance benefits both the unbanked and the under-banked and contributes to poverty reduction. Microfinance is the provision of financial services to low-income consumers via microcredit, mandatory savings, and microinsurance, bringing financial services into the reach of millions who are regarded as being too poor to be financed by universal banks. Microfinance is frequently directed at women, and as such has become a vital tool for women empowerment. According to Ding et al. (2020), women empowerment through microfinance has the potential to positively affect women in two ways. To begin, microfinance enables underprivileged women to make income independently of their husbands and to support their families financially, immediately boosting their self-esteem. Second, it liberates women from the limitations of their household precincts and integrates them into a larger community when they gain access to credit and use it to launch income-generating activities. Their self-confidence is fostered via exposure to the larger community and contact with other women within the group. Due to the limited research conducted on microfinance and women empowerment in Egypt, this paper is conducted to fulfill this research gap. Therefore, the main aim of this paper is to make generalized assumptions about the impact of microfinance on women empowerment with moderating roles of education and age in Egyptian society.

It is widely considered that if women achieve economic empowerment through microfinance, they would also achieve empowerment in other aspects. Thus, studies demonstrating that microfinance has an effect on other dimensions of empowerment (Patel and Patel, 2017; Jack and Roland, 2016; Ajjarapu, 2012; Fwanba et al., 2015) demonstrate that this occurs via economic empowerment. That is, microfinance clients must first achieve economic empowerment; and it is this economic empowerment that will result in other forms of empowerment. While an indirect association between microfinance and non-economic empowerment has been proven in the literature, a direct relationship has not been established. No studies have examined the influence of microfinance on other dimensions of empowerment apart from economic empowerment.

Furthermore, the majority of studies examining the impact of microfinance on women empowerment do so from the perspective of self-help groups (SHGs) and microfinance institutions (MFIs). Studies have focused primarily on microfinance from SHGs (e.g., Patel and Patel, 2017; Ajjarapu, 2012) and MFIs (e.g., Josephat et al., 2017; Agu et al., 2016; Fwanba et al., 2015), with only a passing mention of microfinance from microfinance banks (MFBs). Finally, another gap identified in the research is the emphasis on the income-based model of economic empowerment. Economic empowerment includes several factors in addition to increasing income, such as control over resources, contribution to household expenditure, and financial decision-making. Microfinance’s impact on this non-income economic empowerment has gotten limited consideration in previous research. Even when these variables are mentioned in empirical investigations, they are frequently deduced (e.g., Patel and Patel, 2017; Fwanba et al., 2015).

Numerous research on microfinance and women empowerment have been undertaken in Africa and other regions of the world. As previously stated, despite the abundance of studies, some underlying issues can be noticed, necessitating this study. While some studies downplay the importance of other microfinance variables such as savings (Patel and Patel, 2017; Awojobi, 2014; Ziem and Bebelleh, 2014), others overlook intermediary variables such as personal characteristics that have been shown to influence women empowerment, such as initial level of income and initial level of empowerment (Addae-Korankye and Abada, 2017; Daniyan‑Bagudu et al., 2016). Additionally, some studies’ methodology is not robust in terms of sampling strategy (Modi et al., 2014; Awojobi, 2014) or analytical approach (Daniyan‑Bagudu et al., 2016; Jack and Roland, 2016; Awojobi, 2014; Kato and Kratzer, 2013), making generalization of findings impossible.

The research questions could be stated as follows:

The independent variable “microfinance” is adopted from Khan and Rehaman (2007) and Gorrette (2019). The dependent variable “women empowerment” is measured by six dimensions. Economic empowerment, socio-cultural empowerment, and familial/interpersonal empowerment are adopted from Ahmed (2015), El Hadidi (2018), and Jannah (2020). Psychological empowerment is adopted from El Hadidi (2018) and Jannah (2020). Political empowerment is adopted from Ahmed (2015), El Hadidi (2018), and Jannah (2020). Legal empowerment is adopted from Josephat (2017) and Jannah (2020).

Based on the conceptual framework, the hypothesized model and reviewing of the related studies and theories, the study hypotheses were formulated as below:

Egyptian women are referred to as the research population in this study. The questionnaire was divided in two broad categories. The first category is made up of general information and the second category is the body of the questionnaire that includes three sections: first: microfinance; second: women empowerment (socio-cultural, economic, familial/interpersonal, political, legal and psychological). A Likert scale was used to measure opinions.

The research questionnaire was given to eight hundred (800) respondents; 544 questionnaires representing 68% were returned, and 66 questionnaires representing 8.2% were incomplete or ineligible or refusals and 256 (32%) were not reached. There were 478 acceptable responses, a response rate 59.8% which is very good given the nature of the study. The structural equation modelling (SEM) software package was utilized in this research paper to investigate the interrelationships between the constructs of the hypothesized model. After completing a confirmatory factor analysis, the structural model is evaluated by testing the hypotheses that underpin the research model.

Cronbach’s alpha is a frequently employed measure for assessing the internal consistency of a test. The calculation involves determining the mean of all potential split-half reliability coefficients. The concept of correlation pertains to the degree of association between the scores of respondents on two distinct sets of indicators (Bryman and Bell, 2011). According to Sekaran and Bougie (2016), a higher reliability coefficient is indicative of better reliability. Typically, reliabilities below 0.60 are regarded as poor, while those falling within the range of 0.70 are considered acceptable, and reliabilities beyond 0.80 are deemed good. Table 1 includes the test–retest reliability results by analysis of 40 questionnaires.

The Cronbach’s alpha coefficient for the 37 items evaluated collectively ranged from a minimum of 0.750 to a maximum of 0.939, with an overall coefficient of 0.958. Thus, this study’s research instrument demonstrates a high level of reliability, surpassing the commonly accepted reliability score of 0.7.

The reliability of a construct in the measurement model is possibly calculated using composite reliability (CR). CR determines the consistency of the construct itself and is a more representing method of overall reliability (Hair et al., 2019). The research result shows the CR of Microfinance = 0.875, Familial/Interpersonal = 0.829, Psychological = 0.805, Political = 0.691, Legal = 0.821, Socio-Cultural = 0.941 and Economic = 0.927. As a result, it is evident that all of the constructs in the measurement model are reliable.

The average variance extracted (AVE) should always be above 0.50 (Hair et al., 2019). Overall, the AVE of the constructs (Microfinance = 0.543, Familial/Interpersonal = 0.591, Psychological = 0.576, Political = 0.574, Legal = 0.550, Socio-Cultural = 0.727 and Economic = 0.678) are more than 0.500. Overall, the measurement results are satisfactory, indicating that the structural model may be evaluated.

Measurement model result: The eight-factor model was estimated using CFA in AMOS. The value of DF was 792 (it should be more than 0), χ²/DF has a value of 2.196, that is less than 3.0 (it should be less than or equal 3.0). The RMSEA was 0.050 (it should be less than 0.08). The TLI index was 0.921 which is very close to 1.0 (a value of 1.0 indicates perfect fit). The CFI was 0.927. All indices are close to a value of 1.0 in CFA, indicating that the measurement models provide good support for the factor structure determined through the CFA.

Structural model validity: The findings of the structural model using the AMOS software show that DF was 807 (it should be more than 0), χ²/DF has a value of 2.441, that is less than 3.0 (it should be less than or equal 3.0). The RMSEA was 0.055 (it should be less than 0.08). The TLI index was 0.905 which is very close to 1.0 (a value of 1.0 indicates perfect fit). The CFI was 0.911. All indices are close to a value of 1.0, indicating that the measurement models provide good support for the factor structure determined through the CFA.

The individual tests of significance of the relationship between the variables reveal that:

The findings and hypothesis testing revealed that the independent variable (microfinance) had a significant positive impact on women’s empowerment (socio-cultural, economic, familial/interpersonal, political, legal, and psychological) in Egypt in the following ways:

According to the analysis, at the 5% significance threshold, all are considered significant. The estimated structural model corroborated the hypotheses, as the microfinance construct explained 48.2% of economic empowerment variance (R² = 0.482), 63.3% of socio-cultural empowerment variance (R² = 0.633), 85.1% of familial/interpersonal empowerment variance (R² = 0.851), 78.5% of political empowerment variance (R² = 0.785), 10.1% of legal empowerment variance (R² = 0.101), and 43.7% of psychological empowerment variance (R² = 0.437).

The focus of this research is to evaluate the impact of microfinance on women empowerment in Egypt, with moderating roles of education and age. The study used a quantitative correlational methodology to obtain primary sample data from 478 Egyptian women. The regression analysis reveals that all hypotheses are supported. Besides, the study found that education level moderates the relationship between microfinance and women empowerment in Egypt, and age moderates the relationship between microfinance and women empowerment in Egypt.

Based on the findings of the study, the following recommendations can be suggested:

The degree to which the conclusions may be extrapolated to a larger population, cases, or situations is referred to as external validity (Saunders et al., 2019). As a result, the researcher cannot presume that the findings apply to other situations. Thus, the study is limited as follows:

The following areas for further investigation are suggested based on the findings of this study: