Green Microfinance and Women’s Empowerment: Why Does Financial Literacy Matter?

1.

COMMENT:

The sample is from women farmer groups in one of the provinces in Indonesia. However, it is strange because some of the respondents are male. It might be better if hypothesis testing (PLS-SEM) could be conducted by excluding seven male respondents.

RESPONSE: 

We are thankful for reviewer’s insightful and helpful comments. Actually, we have nine male respondents. To do so, we have reanalysed the hypotheses testing by excluding around nine male respondents as follows:

ACTION:

To obtain the sample, we used a purposive sampling. The sample size was chosen based on the partial least squares-structural equation model (PLS-SEM) sample size requirement [36]. The most important factors in determining the sample size were statistical power and pointing arrows [37]. With an 80% statistical power (Coefficient of determination at least 0.5; probability of error is 1%) and four pointing arrows (including indirect arrow), the minimal sample size was 58. From January to March 2021, we distributed questionnaires to survey in the first phase. This study's target population consisted of 100 respondents. We discontinued 80 samples because around 20% (20 questionnaires) of the responses were missing. Since we had male respondents in the survey, it might be better to exclude nine male respondents from the survey results. Therefore, we ended up with 71 female respondents from the survey for the data analysis purpose. In the second phase, a number of focus group discussions (FGDs) were arranged to examine the MFI members’ perception of a local government plan to enhance the financial inclusion in managing green MFIs. Almost seven participants consisting of five women microfinance group members, a local government officer, and a local spokesperson (the Sumbanese called him “Wunang”) were invited. They agreed to take part in the FGD phase. Since the Sumbanese were more comfortable discussing in groups (communal), the FGDs were implemented to get more detailed information. The FGDs were held in an open place in the village (at the women group leader’s home), where they regularly gathered for group meetings. The FGDs were held for about two hours. This strategy allowed the researchers to get more in-depth information about the women's empowerment, financial inclusion, and green microfinance implementation. In addition, we also considered the health protocol for Covid-19 prevention such as social distancing during the FGD session.

2.

COMMENT:

However, again, let's assume that all of the respondents are female. The content of the questionnaire (Table 1) asks whether women's empowerment in MFI is good. Of course, they will answer "good" in the questionnaire because they are female. Do the authors think about this?

RESPONSE: 

We appreciate the reviewer’s insightful and helpful comments. Therefore, we have provided explanation about the respondents’ answer as follows:

ACTION:

The possibility might happen. However, we were acutely aware of power and cultural dynamics in the field areas. Since we took great care to collect authentic field data, interviewees were assured that their information would be kept confidential and used solely for academic purposes. Therefore, we believe the interviewees will answer the questions objectively in accordance with the reality they experience at their green microfinance practice in rural areas.

3.

COMMENT:

It might be better to use an organization with a proportional number of males and females in order to know the effect of women's empowerment.

RESPONSE: 

We thanked for reviewer’s insightful and helpful suggestions. Therefore, we have provided an explanation as follows:

ACTION:

We do agree with reviewer suggestions. However, we suggest future research to enlarge the research location including all area in the Sumba island or women farmers group across Indonesia. Therefore, the future research could get the proportional number of male and female respondent.

1.

COMMENT:

I would like to see more results of empirical research to support each hypothesis. The arguments you offer before presenting H1 are not convincing. When I read these arguments, I could accept H1 going precisely in the opposite direction.

RESPONSE: 

We are thankful for reviewer’s insightful and helpful comments. Therefore, we have provided the arguments to support H1 as follows:

ACTION:

Hypothesis

Researches on how the women’s empowerment impacts their financial literacy are still limited. For this reason, we suggest a different transmission to accommodate the impact of women’s empowerment on the financial literacy. In our viewpoint, women must be empowered in order to manage their households and local group initiatives. After being empowered, they could also learn on how to enhance their financial literacy through both formal education and their local knowledge [27]. To empower the women in rural areas, a bottom-up approach based on local wisdom has been implemented [28]. The women farmer group’s initiatives appear to be effective because they are able to survive and grow in terms of both membership and managed funds. The local wisdom value increases their financial literacy through saving and loans activities.

Discussion

Our results are in line with the previous findings by [27,28]. The women could improve their financial literacy through both formal education and local knowledge after being empowered [27]. To empower the women in rural areas, a bottom-up approach based on local wisdom had been implemented. After implementing their local wisdom in the rural microfinance initiatives, the women's financial literacy (saving and loan) tended to improve [28]. The women’s empowerment provided the access for women to enhance their financial understanding through education [9], either formal or informal. The educated women were more likely to make appropriate judgments, boosting their financial literacy [12]. Increasing the women's educational participation might improve their performance capacity in public places [22]. Promoting the women's ability was crucial to achieving the SDGs and women's well-being [49]. As a result, the SDG 5 must be considered to empower all women [2]. The five members of the microfinance group underlined that the local government and social support for the women's activities might assist them in realizing their visions in a larger way. The women could design their green business ideas by considering their local wisdom (Marapu value), according to the FGD results.

2.

COMMENT:

H4 suppresses the word "equality" in "gender equality." As you propose a mediation, I thought you would test "gender equality" as you propose in H3. However, later you discuss women empowerment instead of gender equality. It would help if you clarified which construct you used in your research.

RESPONSE: 

We appreciate the reviewer’s insightful and helpful suggestions. Therefore, we have clarified which latent (component) that we used in our research as follows:

ACTION:

We want to clarify that our latent (component) and or indicators are related to women empowerment. To do so, we have revised the hypothesis development section and explain the main latent (component) and or indicators in the Table 1. To do so, we have removed the gender equality words.

3.

COMMENT:

A figure showing your research framework at the end of the literature review would help the readers understand the whole picture of your research.

RESPONSE: 

We thanked for reviewer’s insightful and helpful comments. Therefore, we have provided a research framework at the end of the literature as follows:

ACTION:

Figure 1 depicts the framework for women's empowerment and green microfinance practice in East Sumba through financial literacy.

Figure 1. Research framework.

4.

COMMENT:

Although your hypotheses refer to "gender equality," your measures focus predominantly on women (Gender 1, 2, 3, 5, 6). Therefore, it seems you test the role of the female gender instead of gender equality. Also, note that later you mention "women's empowerment" (line 257) instead of gender equality.

RESPONSE: 

We thanked for reviewer’s insightful and helpful comments. Therefore, we have provided explanation to support the women empowerment as our main latent (component) and or indicators with excluding gender 4 from the model (Thus, it becomes Women 1, 2, 3, 4, and 5). Then, we reanalysed the model validity, reliability, and hypothesis testing as follows:

ACTION:

Table 1. Components and indicators.

Note: Women’s empowerment and green microfinance indicators are modified from [1,2]. 

Each latent (component) is included in the research framework. These indicators are assigned to the component that corresponds to them. We used five indicators for women empowerment, six indicators for financial literacy, and six indicators for green microfinance. Therefore, we have three equations derived from our research framework from the last part of the literature review.

5

COMMENT:

Although you have interesting findings, the theoretical contributions of your study are still underdeveloped. You need to show how your results contribute to theory and explain what novelties you offer to the research on gender, financial literacy, or green microfinance. To which previous studies do you contribute and how?  

RESPONSE: 

We thanked for reviewer’s insightful and helpful comments. Therefore, we have showed how our results contribute to theory and explain what novelties on women, financial literacy, or green microfinance. And the contribution of our research to the previous research as follows:

ACTION:

This research offers an important contribution to the body of knowledge and practice by responding to the previous researches [1,2,9,11]. Nawaz, Lindahl and Mokvist studied the relationship between the women’s empowerment, financial literacy and microfinance [9,11]. Those studies had focused on the microfinance rather than the green microfinance. Those studies used qualitative approaches and the results of qualitative approaches frequently lacked of existential verification [53]. Atahau et al. explored the green microfinance, women’s empowerment, renewable energy, governance, and triple bottom line indicators [1,2]. They emphasized on the women’s financial ability rather than the financial literacy. We completed the limitations of previous researches by employing the financial literacy (as a mediating variable) as our novelty on the proposed model of women and green microfinance integration. Therefore, based on the results of this study, our proposed policy-making model can be visualized in Figure 3 below.

Figure 3. Proposed model of women and green microfinance integration through financial literacy.

The proposed model examines the role of financial literacy on the relationship between women’s empowerment and green microfinance. Interestingly, this study also offers a unique perspective to examine the women’s initiative to improve their financial literacy based on their local wisdom (Marapu). Thus, they can contribute as the active actor in supporting the SDG targets (SDG 4, 5, and 13). This is consistent with the women farmer groups' vision of overcoming the poverty by increasing the women's role in the green microfinance practices through adequate financial literacy. Thus, creating a village model to examine the women and green microfinance integration through financial literacy was one possible solution to meet the target. The village model's penta-helix stakeholders could be included by combining the government, public, non-government organizations, university social responsibility, and corporate social responsibility. The collaboration is expected to accelerate the achievement of the SDGs' targets.

6

COMMENT:

I also recommend you present the research limitations and explore avenues for future research. Both aspects are welcomed since they help other researchers develop your findings and overcome the limitations of your study. Moreover, can the findings of your research be generalized?

RESPONSE: 

We thanked for reviewer’s insightful and helpful comments. Therefore, we have presented the research limitations and explore avenues for future research (including the generalizability issues) as follows:

ACTION:

However, along with its strengths, this study also has several limitations. First, since we utilized the purposive sampling method, future researches are suggested to apply another sampling method, such as the random sampling method, to escalate the study’s generalizability. In relation to the location of this study, future researches are suggested to examine a bigger research location including all area in Sumba Island or specifically the women farmer groups across Indonesia to increase the findings generalizability level. Moreover, the research scope of this study was limited to a cross-section at a specific point in time. To measure the actual green MFI sustainability, it might be important to measure the length of time of the green MFI. Hence, a longitudinal study considering the impact of seasonality and cross-section scope is highly recommended to increase the research validity. Lastly, the current Covid-19 pandemic might bring the effect in data collection in the field. Thus, we also recommend future researches to conduct in-depth interviews to enrich the research data collection.

7

COMMENT:

"A recent study by [2]" (line 52); "According to a recent study by [9]" (line 131 and others). Replace the number with the authors' names

RESPONSE: 

We thanked for reviewer’s insightful and helpful comments. Therefore, we have replaced the number with the authors' names as follows:

ACTION:

A recent study by Atahau et al. highlighted that the green microfinance in East Sumba mediated the nexus between the renewable energy and women's empowerment [2].

According to a recent study by Lindahl and Mokvist, the financial literacy benefits the women's access to microfinance in developing countries [9].

Nawaz, Lindahl and Mokvist emphasized that the microfinance could be a powerful tool for the women's empowerment when combined with financial literacy [9,11].

8

COMMENT:

"Based on our best practices" (line 57). What do you mean by "our" best practices?

RESPONSE: 

We thanked for reviewer’s insightful and helpful comments. Therefore, we have clarified the word of "our" best practices as follows:

ACTION:

We would like to sincerely apologize for the statement "our" best practices. Therefore, we have deleted the statement of "our" best practices in the manuscript. The sentences should be:

Based on the previous researches [1,2,9,11], we expect that promoting financial inclusion (SDG 4) will support the pro-climate (SDG 13) and pro-women’s empowerment (SDG 5) policy in East Sumba.

9

COMMENT:

 A complete English proofreading could also improve the communication of your paper.

RESPONSE: 

We thanked for reviewer’s insightful and helpful comments. In doing so, we have completed English proofreading to improve the communication our paper as follows:

ACTION:

We have proofread (English editing) the manuscript as suggested by reviewer.

10

COMMENT:

Think about the title of your paper. You don't need to mention where data comes from (this is a matter of methodology).

RESPONSE: 

We thanked for reviewer’s insightful and helpful comments. Therefore, we have updated the title of our paper as follows:

ACTION:

Green Microfinance and Women’s Empowerment: Why Does Financial Literacy Matter?

1.

COMMENT:

Figure 1 seems the Structural Equation Model instead of a research framework.  You don't need to show the items that compose each construct. A research framework only depicts the constructs, their relationships, and the research hypotheses. Please see other studies previously published in Sustainability to solve this issue

RESPONSE: 

We are thankful for reviewer’s insightful and helpful comments. Therefore, we have provided the new framework as follows:

ACTION:

Figure 1. Research framework.

2.

COMMENT:

Figure 2 is unnecessary. Although I'm glad to know where Sumba Island is geographically located, it is not important for the research. Of course, contextual information is helpful, but the figure can be removed;

RESPONSE & ACTION: 

We thanked for reviewer’s insightful and helpful comments. Therefore, we have removed Figure 2 from the body of paper.

3.

COMMENT:

Figure 3 (actually it is figure 4, on page 12) is not really a figure I would expect in a scientific paper. Please focus on discussing the results of your study. I would recommend you remove this figure from your manuscript. 

RESPONSE & ACTION: 

We thanked for reviewer’s insightful and helpful comments. Therefore, we have removed Figure 4 from the body of paper.