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Socially Disadvantaged Groups and Micro-finance in India

Author

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  • Jean-Marie Baland
  • Rohini Somanathan
  • Lore Vandewalle

Abstract

About two-thirds of microfinance clients in India are reported to be in Self-Help Groups (SHGs). These mostly women’s groups have been promoted by nationalized banks since the early nineties to improve credit access among especially disadvantaged populations. The paper studies the survival of members and groups and their differential access to credit using a census of SHGs created between 1998 and 2006 in 386 villages in eastern India. Households without land and those from disadvantaged castes and tribes exhibit higher attrition rates and smaller loans but we find the main predictor of differential outcomes is education rather than social identity. Members with formal education receive larger loans and have a 30 per cent lower risk of being separated from their group. Groups with no such members are also four times more likely to become inactive.

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  • Jean-Marie Baland & Rohini Somanathan & Lore Vandewalle, 2017. "Socially Disadvantaged Groups and Micro-finance in India," Working Papers id:12201, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:12201
    Note: Institutional Papers
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    Cited by:

    1. Demont, Timothée, 2016. "Microfinance spillovers: A model of competition in informal credit markets with an application to Indian villages," European Economic Review, Elsevier, vol. 89(C), pages 21-41.
    2. Kumar, Neha & Raghunathan, Kalyani & Arrieta, Alejandra & Jilani, Amir & Pandey, Shinjini, 2021. "The power of the collective empowers women: Evidence from self-help groups in India," World Development, Elsevier, vol. 146(C).
    3. Vandewalle, Lore, 2017. "The Role of Accountants in Indian Self-Help Groups: A Trade-off between Financial and Non-Financial Benefits," World Development, Elsevier, vol. 93(C), pages 177-192.
    4. Danish Ahmad & Itismita Mohanty & Laili Irani & Dileep Mavalankar & Theo Niyonsenga, 2020. "Participation in microfinance based Self Help Groups in India: Who becomes a member and for how long?," PLOS ONE, Public Library of Science, vol. 15(8), pages 1-26, August.
    5. Demont, Timothée, 2022. "Coping with shocks: How Self-Help Groups impact food security and seasonal migration," World Development, Elsevier, vol. 155(C).
    6. Kanika Rana & Brinda Viswanathan, 2019. "Patterns of Access to Microfinance Loans in India," Review of Development and Change, , vol. 24(2), pages 259-279, December.
    7. Timothée Demont, 2020. "Coping with shocks: the impact of Self-Help Groups on migration and food security," Working Papers halshs-02571730, HAL.

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    More about this item

    Keywords

    eSS; Socially Disadvantaged Groups; Micro-finance; Self-Help Groups (SHGs); nationalized banks; disadvantaged populations; Households without land; smaller loans; education; formal education; larger loans; risk; inactive groups; India.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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