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Microfinance and Prosocial Behaviors: Experimental Evidence of Public-Good Contributions in Uganda

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  • Bryan C. McCannon
  • Zachary Rodriguez

Abstract

Microfinance is an important component of the fight against poverty. We ask whether access to microfinance loans by the poor relates to their prosocial behaviors. A lab-in-the-field study in southern, rural Uganda is done. A public-good game is used to measure subjects' willingness to free-ride. We document higher levels of contributions by those who have previously received a microloan. We explore potential explanations such as differing social-norm assessments, measurable income effects, or sample selection bias. Receiving a microloan continuesto have an independent effect on prosociality. The results suggest that exposureto microfinance correlates with social preferences.

Suggested Citation

  • Bryan C. McCannon & Zachary Rodriguez, 2019. "Microfinance and Prosocial Behaviors: Experimental Evidence of Public-Good Contributions in Uganda," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 175(2), pages 228-257.
    • Handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2018-0010
    DOI: 10.1628/jite-2018-0010
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    Keywords

    lab in the field; microfinance; public goods; social preference; Uganda;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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