Microfinance institutions (MFIs) have emerged as a significant component of financial services in Ethiopia's development landscape, particularly for women entrepreneurs who face unique challenges and opportunities. The study will employ a comprehensive review of existing literature to construct a robust theoretical model that integrates microfinance practices with broader economic and social factors affecting female entrepreneurship in Ethiopia. This theoretical framework highlights the potential of MFIs as a mechanism for enhancing economic empowerment among Ethiopian women entrepreneurs, but also underscores the need for tailored interventions and supportive policies. Policy makers should prioritise the development of targeted microfinance programmes that address specific challenges faced by female entrepreneurs in Ethiopia. Microfinance Institutions, Women Entrepreneurs, Financial Empowerment, Development Policy