Building social capital through microfinance
By: Benjamin Feigenberg, Erica M. Field, Rohini Pande
Contributors: Field, Erica Marie, 1974-; Pande, Rohini; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16018; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16018.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "A number of development assistance programs promote community interaction as a means of building social capital.  Yet, despite strong theoretical underpinnings, the role of repeat interactions in sustaining cooperation has proven difficult to identify empirically.  We provide the first experimental evidence on the economic returns to social interaction in the context of microfinance.  Random variation in the frequency of mandatory meetings across first-time borrower groups generates exogenous and persistent changes in clients' social ties.  We show that the resulting increases in social interaction among clients more than a year later are associated with improvements in informal risk-sharing and reductions in default.  A second field experiment among a subset of clients provides direct evidence that more frequent interaction increases economic cooperation among clients.  Our results indicate that group lending is successful in achieving low rates of default without collateral not only because it harnesses existing social capital, as has been emphasized in the literature, but also because it builds new social capital among participants"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 6/1/2010.

Includes bibliographical references.

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