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Ownership and sustainability: Lessons on group-based financial services from South Asia


  • Lynn Bennett

    (Human Resources Division, The World Bank, Washington, D.C., USA)

  • Mike Goldberg

    (Human Resources Division, The World Bank, Washington, D.C., USA)

  • Pamela Hunte

    (Human Resources Division, The World Bank, Washington, D.C., USA)


This study of rural group-based financial service projects of five NGOs in South Asia illustrates a great degree of variation between the different systems in structure, function and success rates. In the area of accessibility, all five systems have been quite successful in reaching the rural poor-especially non-literate women. However, results concerning financial sustainability of the groups are not so clear cut. The two systems in which the NGO helped groups to form their own parallel financial institution (e.g. a co-operative or village bank) achieved financial sustainability than those systems where the NGO linked groups with existing local financial institutions. But the main factor behind the success of parallel systems the central concept of client ownership. This has resulted in high degrees of loan recovery due to the fact that all or most of the loan funds are internally generated and therefore owned by the group members rather than externally obtained from donors. In addition, social intermediation in the sense of investment in capacity building at the group level (management, accounting, etc.) is a crucial step towards sustainability. Despite the importance of achieving sustainability, the authors conclude that subsidies do have a role to play-especially in harsh socio-economic environments where costs are necessarily high. However, subsidies should be utilized to develop group members' abilities to assume the responsibilities of ownership-rather supporting a welfare approach.

Suggested Citation

  • Lynn Bennett & Mike Goldberg & Pamela Hunte, 1996. "Ownership and sustainability: Lessons on group-based financial services from South Asia," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(2), pages 271-288.
  • Handle: RePEc:wly:jintdv:v:8:y:1996:i:2:p:271-288
    DOI: 10.1002/(SICI)1099-1328(199603)8:2<271::AID-JID375>3.0.CO;2-Z

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    3. Aliber, Michael., 2002. "Informal finance in the informal economy : promoting decent work among the working poor," ILO Working Papers 993576903402676, International Labour Organization.
    4. Lynn Bennett & Carlos E. Cuevas, 1996. "Sustainable banking with the poor," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(2), pages 145-152.
    5. Thorp, Rosemary & Stewart, Frances & Heyer, Amrik, 2005. "When and how far is group formation a route out of chronic poverty?," World Development, Elsevier, vol. 33(6), pages 907-920, June.
    6. Katsushi S. Imai & Raghav Gaiha, 2014. "Dynamic and Long-term Linkages among Growth, Inequality and Poverty in Developing Countries," The School of Economics Discussion Paper Series 1410, Economics, The University of Manchester.
    7. Ana MARR & Janina LEON & Fatima PONCE, 2014. "Financial Inclusion of the Poor in Peru: Explanatory factors and determinants," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 14(1), pages 101-122.
    8. Panda, Debadutta Kumar & Atibuddi, Hrudananda, 2010. "Impact of Group-Based Microfinance on Rural Household Income: Evidence from an Indian State," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 38(2).
    9. Edwards, Michael, 1999. "NGO Performance - What Breeds Success? New Evidence from South Asia," World Development, Elsevier, vol. 27(2), pages 361-374, February.
    10. Jain, Sanjay & Mansuri, Ghazala, 2003. "A little at a time: the use of regularly scheduled repayments in microfinance programs," Journal of Development Economics, Elsevier, vol. 72(1), pages 253-279, October.
    11. Sophie King, 2014. "Cultivating political capabilities among Ugandan smallholders: good governance or popular organisation building?," Global Development Institute Working Paper Series 19314, GDI, The University of Manchester.
    12. Jones, Gareth A. & Dallimore, Anthea, 2009. "Wither participatory banking?: experiences with village banks in South Africa," LSE Research Online Documents on Economics 23354, London School of Economics and Political Science, LSE Library.
    13. Nayma Qayum & Mrinmoy Samadder & Rehnuma Rahman, 2012. "Group Norms and the BRAC Village Organization – Enhancing Social Capital Baseline," Working Papers id:4984, eSocialSciences.

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