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Ethnic Networks and Enterprise Credit: The Serahules of The Gambia

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  • Gajigo, Ousman
  • Foltz, Jeremy D.

Abstract

This work analyzes the effects of ethnic heterogeneity on credit and entrepreneurship in The Gambia. We develop a model of credit transactions based on ethnic density, which shows that where formal credit markets fail denser ethnic groups will have better access to credit. This work places a special emphasis on the Serahule ethnic group, which is ethnically dense and entrepreneurially successful. Our results show that Serahule-owned enterprises are indeed larger and more profitable. Furthermore, their marginal rate of return of capital is significantly lower than that of enterprises owned by other ethnicities, as one would expect with lower credit constraints.

Suggested Citation

  • Gajigo, Ousman & Foltz, Jeremy D., 2010. "Ethnic Networks and Enterprise Credit: The Serahules of The Gambia," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61822, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61822
    DOI: 10.22004/ag.econ.61822
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    File URL: https://ageconsearch.umn.edu/record/61822/files/serahule-credit_AAEA.pdf
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    References listed on IDEAS

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    1. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 423-423.
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    Cited by:

    1. Tanika Chakraborty & Anirban Mukherjee & Sarani Saha, 2015. "Court-ship, kinship and business: a study on the interaction between the formal and the informal institutions and its effect on entrepreneurship," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-21, December.
    2. Jean‐Louis Arcand & Dany Jaimovich, 2019. "Does ethnic diversity decrease economic interactions? Evidence from exchange networks in rural Gambia," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 27(2), pages 327-353, February.

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