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Social sanctions or social relations? Microfinance in Mexico

Author

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  • Griffin, Denis
  • Husted, Bryan W.

Abstract

Microfinance is a vital source of funding for micro-entrepreneurs in emerging markets and underdeveloped nations. The emphasis in the literature on social sanctions as a mechanism for ensuring high repayment rates may be misplaced. We propose that the construct of harmonious social relations needs to be added in order to explain repayment rates and that high repayment rates foster increased capital formation for micro-entrepreneurs. Using a sample of 182 respondents drawn from a microfinance institution in Mexico and structural equation modeling, the results support the main hypotheses. Unexpectedly, social sanctions had a negative impact on repayment rates.

Suggested Citation

  • Griffin, Denis & Husted, Bryan W., 2015. "Social sanctions or social relations? Microfinance in Mexico," Journal of Business Research, Elsevier, vol. 68(12), pages 2579-2587.
  • Handle: RePEc:eee:jbrese:v:68:y:2015:i:12:p:2579-2587
    DOI: 10.1016/j.jbusres.2015.06.023
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    References listed on IDEAS

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    Cited by:

    1. Blanco-Oliver, Antonio & Irimia-Dieguez, Ana & Reguera-Alvarado, Nuria, 2016. "Prediction-oriented PLS path modeling in microfinance research," Journal of Business Research, Elsevier, vol. 69(10), pages 4643-4649.
    2. Lucia, Dalla Pellegrina & Angela, De Michele & Giorgio, Di Maio & Paolo, Landoni & Susanna, Parravicini, 2017. "Group meeting frequency and borrowers’ repayment performance in microfinance: Evidence from a quasi-natural experiment in South Africa," Working Papers 374, University of Milano-Bicocca, Department of Economics, revised 30 Nov 2017.

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