The Economic Returns to Social Interaction: Experimental Evidence from Microfinance

Feigenberg, Benjamin; Field, Erica; Pande, Rohini

doi:10.1093/restud/rdt016

Cited by 223 publications

(166 citation statements)

References 40 publications

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“…We then proceed to show that by interacting with the benefits from social capital, group meetings may induce the creation of social capital. This is consistent with the results of a field experiment by Feigenberg et al (2013).…”

Section: Discussionsupporting

confidence: 92%

“…Intuitively, the more time I spend with someone, the greater the benefit to forming a social bond with that person. This is our interpretation of the Feigenberg et al (2013) findings. The second is that meetings play a more mechanical role in facilitating mutual insurance.…”

Section: The Role Of Groupssupporting

confidence: 61%

“…For example, groups may generate social capital that is then used to sustain IJ. The analysis is motivated by the findings of Feigenberg et al (2013). In their experiment, borrowers who were randomly assigned to higher frequency repayment meetings went on to achieve higher repayment rates.…”

Section: The Role Of Groupsmentioning

confidence: 99%

“…Finally, we consider evidence from Feigenberg et al (2013), who find that an increase in the meeting frequency of individual liability borrowing groups created social capital, which led to a subsequent improvement in repayment rates. We discuss two mechanisms by which group meetings could create social capital or foster mutual insurance.…”

Section: Introductionmentioning

confidence: 99%

“…Both mechanisms suggest that increasing meeting length or frequency could lead to more mutual insurance, however if borrowers are able to coordinate among themselves to spend time together, independent of the lender, artificially increasing meeting length or frequency with the aim of fostering insurance cannot increase welfare. In other words, an additional friction is required for the intervention of Feigenberg et al (2013) to be welfare-improving.…”

Section: Introductionmentioning

confidence: 99%

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Group lending without joint liability

Quidt

Fetzer

Ghatak

2016

Journal of Development Economics

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This paper contrasts individual liability lending with and without groups to joint liability lending. We are motivated by an apparent shift away from the use of joint liability by microfinance institutions, combined with recent evidence that a) converting joint liability groups to individual liability groups did not a↵ect repayment rates, and b) an intervention that increased social capital in individual liability borrowing groups led to improved repayment performance. First, we show that individual lending with or without groups may constitute a welfare improvement over joint liability, so long as borrowers have su cient social capital to sustain mutual insurance. Second, we explore how the lender's lower transaction costs in group lending can encourage insurance by reducing the amount borrowers have to pay to bail one another out. Third, we discuss how group meetings might encourage insurance, either by increasing the incentive to invest in social capital, or because the time spent in meetings can facilitate setting up insurance arrangements. Finally, we perform a simple simulation exercise, evaluating quantitatively the welfare impacts of alternative forms of lending and how they relate to social capital.

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Section: Discussionsupporting

confidence: 92%

Section: The Role Of Groupssupporting

confidence: 61%

Section: The Role Of Groupsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Group lending without joint liability

Quidt

Fetzer

Ghatak

2016

Journal of Development Economics

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Rethinking Microfinance for Developed Countries

Pedrini

Bramanti

Minciullo

et al. 2016

J of Intl Development

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Despite the growth of the sector, microfinance's academic research in developed countries is still very limited. The paper builds on earlier works, which discuss four technical problems related to the diffusion of microfinance in developing countries. In re‐framing their approach to apply it to developed countries, we propose a set of recommendations in order to foster the growth of the microfinance sector: (1) the use of financial institutions to supply microfinance products; (2) the development of an alternative credit scoring in banks; (3) the adoption of a regulatory framework for microfinance; and (4) the use of networks as social collaterals. Copyright © 2016 John Wiley & Sons, Ltd.

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

Lee,

Singh

2023

J of Intl Development

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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.

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The Economic Returns to Social Interaction: Experimental Evidence from Microfinance

Cited by 223 publications

References 40 publications

Group lending without joint liability

Group lending without joint liability

Rethinking Microfinance for Developed Countries

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

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