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The Role of Accountants in Indian Microfinance Groups: a Trade-Off Between Financial and Non-Financial Benefits

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  • Lore Vandewalle

    () (Center for Research in the Economics of Development, University of Namur)

Abstract

Self-Help Groups (SHGs) create a platform that allows women to meet on a weekly basis to save and to take loans if needed. Strict records of all saving and lending is important, both to avoid con flicts in the group and to obtain access to bank loans. Accounting is done either internally by a group member or externally by another villager. Economic theory suggests that repeated interaction between individuals can help to build social capital. However, in the context of these SHGs, the presence of an, often male, external accountant might hamper this process. Using rst hand data on SHGs in Northern India, I nd that repeated interaction is more likely to create non-financial benefits in the form of mutual assistance and collective action when there is no external involvement. However, these bene ts come at a cost, as SHGs with internal accountants distribute financial benefits more unequally and the accountants themselves receive larger shares than the other members of the groups. I provide evidence that the larger shares cannot be explained as a compensation for better financial performance, but that some form of elite capture occurs. Although this implies that an internal accountant is more expensive than an external accountant, there is no evidence that groups with internal accountants are less stable. Members are not more likely to leave groups, possibly because the loss in nancial bene ts is outweighed by the gain in non-financial benefits.

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File URL: http://www.fundp.ac.be/eco/economie/recherche/wpseries/wp/1118.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by University of Namur, Department of Economics in its series Working Papers with number 1118.

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Length: 44 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:nam:wpaper:1118

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  1. Platteau, Jean-Philippe & Gaspart, Frederic, 2003. "The Risk of Resource Misappropriation in Community-Driven Development," World Development, Elsevier, vol. 31(10), pages 1687-1703, October.
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  3. Dreze, Jean & Sen, Amartya, 2002. "India: Development and Participation," OUP Catalogue, Oxford University Press, edition 2, number 9780199257492, September.
  4. Gani Aldashev & Catherine Guirkinger, 2011. "Deadly Anchor: Gender Bias under Russian Colonization of Kazakhstan, 1898-1908," Working Papers 1111, University of Namur, Department of Economics.
  5. Joshua D. Angrist, 2000. "Estimation of Limited-Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," NBER Technical Working Papers 0248, National Bureau of Economic Research, Inc.
  6. Amy Jocelyn Glass, 2004. "Outsourcing under Imperfect Protection of Intellectual Property," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 867-884, November.
  7. Todd, Petra, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Comment," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 25-27, January.
  8. Marius-Gnanou Kamala & Palier Jane, 2002. "Th. Fisher, M. S. Sriram , Beyond Micro-Credit. Putting Development Back into Micro-Finance," Revue Tiers Monde, Programme National Persée, vol. 43(172), pages 888-890.
  9. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 27-28, January.
  10. Imbens, Guido W, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Comment," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 17-20, January.
  11. Mullahy, John, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Comment," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 23-25, January.
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