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Membership has its priveleges : the effect of social capital and neighbourhood characteristics on the earnings of microfinance borrowers

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  • Rafael Gomez
  • Eric Santor

Abstract

This paper examines the determinants of self-employment success for microcredit borrowers. Theories of social capital and neighbourhood effects are integrated in an attempt to account for earnings differentials amongst a unique sample of microfinance borrowers. The paper posits that social capital - social relations that facilitate individual action – is essential for microentrepreneurial success. Based on a survey and data collected by the authors, this study demonstrates that social capital is a positive determinant of self-employment earnings. It also highlights the role that neighbourhoods play in fostering social capital and improving microentrepreneurial performance.

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File URL: http://eprints.lse.ac.uk/361/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 361.

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Date of creation: Nov 2001
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Publication status: Published in Canadian Journal of Economics, November, 2001, 34(4), pp. 943-966. ISSN: 1540-5982
Handle: RePEc:ehl:lserod:361

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Keywords: Microfinance; self-employment; social capital. JEL classification codes : J23; Z13; O17;

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References

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Citations

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Cited by:
  1. James C. Brau & Gary M. Woller, 2004. "Microfinance: A Comprehensive Review of the Existing Literature," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 9(1), pages 1-28, Spring.
  2. Marina Della Giusta, 2010. "Social Capital and Economic Development," Economics & Management Discussion Papers em-dp2010-02, Henley Business School, Reading University.
  3. Jonathan Lashley & Karen Lord, 2002. "Microcredit in the Caribbean: Experiences & Best Practices," IDB Publications 23738, Inter-American Development Bank.
  4. Yamamura, Eiji, 2012. "Norm for redistribution, social capital, and perceived tax burden: comparison between high- and low-income households," MPRA Paper 39434, University Library of Munich, Germany.
  5. Rafael Gomez & Eric Santor, 2003. "Do Peer Group Members Outperform Individual Borrowers? A Test of Peer Group Lending Using Canadian Micro-Credit Data," Working Papers 03-33, Bank of Canada.
  6. Demirguc-Kunt, Asli & Klapper, Leora F. & Panos, Georgios A., 2009. "Entrepreneurship in post-conflict transition : the role of informality and access to finance," Policy Research Working Paper Series 4935, The World Bank.
  7. Aggarwal, Raj & Goodell, John, 2013. "Lending to women in microfinance: influence of social trust and national culture Lending to women in microfinance: influence of social trust and national culture," Working Paper 1317, Federal Reserve Bank of Cleveland.
  8. Campolieti , Michele & Gomez, Rafael & Gunderson, Morley, 2009. "Volunteering, Income Support Programs and Disabled Persons," CLSSRN working papers clsrn_admin-2009-16, Vancouver School of Economics, revised 16 Feb 2009.
  9. Kangogo, Daniel & Lagat, Job & Ithinji, Gicuru, 2013. "The Influence of Social Capital Dimensions on Household Participation in Micro-Credit Groups and Loan Repayment Performance in Uasin Gishu County, Kenya," MPRA Paper 48624, University Library of Munich, Germany.
  10. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.
  11. Casson, Mark C. & Della Giusta, Marina & Kambhampati, Uma S., 2010. "Formal and Informal Institutions and Development," World Development, Elsevier, vol. 38(2), pages 137-141, February.
  12. Stuart, Guy, 2006. "Caste Embeddedness and Microfinance: Savings and Credit Cooperatives in Andhra Pradesh, India," Working Paper Series rwp06-037, Harvard University, John F. Kennedy School of Government.
  13. Ciarli, Tommaso & Parto, Saeed & Savona, Maria, 2010. "Conflict and Entrepreneurial Activity in Afghanistan: Findings from the National Risk Vulnerability Assessment Data," Working Paper Series UNU-WIDER Working Paper W, World Institute for Development Economic Research (UNU-WIDER).
  14. Togba, Edith Leadaut, 2012. "Microfinance and households access to credit: Evidence from Côte d’Ivoire," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 473-486.
  15. Jean-François Maystadt, 2004. "Microfinance au Nord : Un effet de mode importé du Sud ?," Mondes en développement, De Boeck Université, vol. 126(2), pages 69-82.
  16. Y Georgellis & J G Sessions & N Tsitsianis, 2005. "Self-Employment Longitudinal Dynamics: A Review of the Literature," Economic Issues Journal Articles, Economic Issues, vol. 10(2), pages 51-84, September.

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