Do Group Dynamics Influence Social Capital Gains Among Microfinance Clients?
August 14, 2014 10:30 AM
As an intrinsic part of the classic microfinance model, group meetings are intended to employ social capital to ensure timely repayment. Recent research suggests that more frequent meetings can increase social capital among first-time clients. Using randomized variation in group meeting frequency for 174 microfinance groups in India, authors Benjamin Feigenberg, Erica Field, Rohini Pande, Natalia Rigol, and Shayak Sarkar demonstrate that social capital gains associated with more frequent meetings continue to accrue across multiple lending cycles.
However, these effects are reduced when group members differ in their borrowing history. In addition, clients who start with low levels of empowerment report higher social capital gains when matched with similar clients. The authors discuss how current microfinance policy debates overlook the creation of social capital, including through repayment meeting frequency, and encourage regulators to undertake a holistic understanding of microfinance's impacts.
Read the full article at Wiley Online.