Expansion, cohesion and diversity: The network advantages of microfinance groups in Indian villages

Abstract

Social network approaches on microfinance self‐help groups (SHGs) find that their organizational capacity lies in network expansion—a social capital basis for various policy interventions through SHGs. To what extent do SHGs create connections in and out of the group boundaries in the caste‐ and gender‐segregated India? This study adds group cohesion and contact diversity as potential network advantages and fully assesses the relationship‐spanning structure of SHGs in India. Modelling network structures in 71 villages in the Diffusion of Microfinance dataset, we identify SHGs' community bonding as well as bridging capacities through the simultaneously expanded and cohesive helpful exchange ties. However, SHG members' exchange ties are more caste‐ and gender‐homogeneous, suggesting that SHGs bond rather than bridge individuals across these salient socio‐demographic groups. We develop a policy imperative to promote mixing based on the socio‐demographic composition when aggregating individual SHGs into higher‐level units.