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

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  • Rafael Gomez
  • Eric Santor

Abstract

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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Suggested Citation

  • Rafael Gomez & Eric Santor, 2001. "Membership has its privileges: the effect of social capital and neighbourhood characteristics on the earnings of microfinance borrowers," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(4), pages 943-966, November.
    • Handle: RePEc:wly:canjec:v:34:y:2001:i:4:p:943-966
    DOI: 10.1111/0008-4085.00107
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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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