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

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  • Gomez, Rafael
  • Santor, Eric

Abstract

This paper examines 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 amongst a unique sample of microfinance borrowers. The paper posits that social capital - social relations that facilitate individual action – is essential for microentrepreneurial success. Based on a survey and data collected by the authors, this study demonstrates that social capital is a positive determinant of self-employment earnings. It also highlights the role that neighbourhoods play in fostering social capital and improving microentrepreneurial performance.

Suggested Citation

  • Gomez, Rafael & Santor, Eric, 2001. "Membership has its priveleges : the effect of social capital and neighbourhood characteristics on the earnings of microfinance borrowers," LSE Research Online Documents on Economics 361, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:361
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    File URL: http://eprints.lse.ac.uk/361/
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    References listed on IDEAS

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    Keywords

    Microfinance; self-employment; social capital. JEL classification codes : J23; Z13; O17;

    JEL classification:

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

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