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Can Self-Help Groups Really Be "Self-Help"?

Listed author(s):
  • Brian P. Greaney
  • Joseph P. Kaboski
  • Eva Van Leemput

We provide an experimental and theoretical evaluation of a cost-reducing innovation in the delivery of "self-help group" microfinance services, in which privatized agents earn payments through membership fees for providing services. Under the status quo, agents are paid by an outside donor and offer members free services. In our multi-country randomized control trial, we evaluate the change in this incentive scheme on agent behaviour and performance, and on overall village-level outcomes. We find that privatized agents start groups, attract members, mobilize savings, and intermediate loans at similar levels after a year but at much lower costs to the NGO. At the village level, we find higher levels of borrowing, business-related savings, and investment in business. Examining mechanisms, we find that self-help groups serve more business-oriented clientele when facilitated by agents who face strong financial incentives.

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File URL: http://hdl.handle.net/10.1093/restud/rdw004
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Article provided by Oxford University Press in its journal The Review of Economic Studies.

Volume (Year): 83 (2016)
Issue (Month): 4 ()
Pages: 1614-1644

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Handle: RePEc:oup:restud:v:83:y:2016:i:4:p:1614-1644.
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  1. Jessica Cohen & Pascaline Dupas, 2008. "Free Distribution or Cost-Sharing? Evidence from a Malaria Prevention Experiment," NBER Working Papers 14406, National Bureau of Economic Research, Inc.
  2. Paolo Casini & Lore Vandewalle & Zaki Wahhaj, 2017. "Public Good Provision in Indian Rural Areas: The Returns to Collective Action by Microfinance Groups," World Bank Economic Review, World Bank Group, vol. 31(1), pages 97-128.
  3. David de Meza & David C. Webb, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 281-292.
  4. Orazio Attanasio & Britta Augsburg & Ralph De Haas & Emla Fitzsimons & Heike Harmgart, 2011. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," IFS Working Papers W11/20, Institute for Fiscal Studies.
  5. Jessica Cohen & Pascaline Dupas, 2010. "Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 1-45.
  6. Joseph P. Kaboski & Robert M. Townsend, 2005. "Policies and Impact: An Analysis of Village-Level Microfinance Institutions," Journal of the European Economic Association, MIT Press, vol. 3(1), pages 1-50, 03.
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