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

  • Rafael Gomez
  • Eric Santor

In this paper we examine 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 among a unique sample of microfinance borrowers. We posit that social capital - social relations that facilitate individual action - is essential for microentrepreneurial success. Based on a survey and data collected by the authors, it is demonstrated that social capital is a positive determinant of self-employment earnings. The role that neighbourhoods play in fostering social capital and improving microentrepreneurial performance are also highlighted.

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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 34 (2001)
Issue (Month): 4 (November)
Pages: 943-966

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Handle: RePEc:cje:issued:v:34:y:2001:i:4:p:943-966
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