IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/17743.html
   My bibliography  Save this paper

The Diffusion of Microfinance

Author

Listed:
  • Abhijit Banerjee
  • Arun G. Chandrasekhar
  • Esther Duflo
  • Matthew O. Jackson

Abstract

We examine how participation in a microfinance program diffuses through social networks. We collected detailed demographic and social network data in 43 villages in South India before microfinance was introduced in those villages and then tracked eventual participation. We exploit exogenous variation in the importance (in a network sense) of the people who were first informed about the program, "the injection points". Microfinance participation is higher when the injection points have higher eigenvector centrality. We estimate structural models of diffusion that allow us to (i) determine the relative roles of basic information transmission versus other forms of peer influence, and (ii) distinguish information passing by participants and non-participants. We find that participants are significantly more likely to pass information on to friends and acquaintances than informed non-participants, but that information passing by non-participants is still substantial and significant, accounting for roughly a third of informedness and participation. We also find that, conditioned on being informed, an individual's decision is not significantly affected by the participation of her acquaintances.

Suggested Citation

  • Abhijit Banerjee & Arun G. Chandrasekhar & Esther Duflo & Matthew O. Jackson, 2012. "The Diffusion of Microfinance," NBER Working Papers 17743, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17743
    Note: TWP
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w17743.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Coralio Ballester & Antoni Calvó-Armengol & Yves Zenou, 2006. "Who's Who in Networks. Wanted: The Key Player," Econometrica, Econometric Society, vol. 74(5), pages 1403-1417, September.
    2. López-Pintado, Dunia, 2008. "Diffusion in complex social networks," Games and Economic Behavior, Elsevier, vol. 62(2), pages 573-590, March.
    3. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
    4. Arun G. Chandrasekhar & Cynthia Kinnan & Horacio Larreguy, 2018. "Social Networks as Contract Enforcement: Evidence from a Lab Experiment in the Field," American Economic Journal: Applied Economics, American Economic Association, vol. 10(4), pages 43-78, October.
    5. Jackson Matthew O. & Rogers Brian W., 2007. "Relating Network Structure to Diffusion Properties through Stochastic Dominance," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-16, February.
    6. de Martí Beltran, Joan, 2009. "Matthew O. Jackson, Social and Economic Networks , Princeton University Press (2008)," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 644-645, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vivi Alatas & Abhijit Banerjee & Arun G. Chandrasekhar & Rema Hanna & Benjamin A. Olken, 2016. "Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia," American Economic Review, American Economic Association, vol. 106(7), pages 1663-1704, July.
    2. Tabasso, Nicole, 2019. "Diffusion of multiple information: On information resilience and the power of segregation," Games and Economic Behavior, Elsevier, vol. 118(C), pages 219-240.
    3. Michel Grabisch & Agnieszka Rusinowska & Xavier Venel, 2019. "Diffusion in countably infinite networks," Documents de travail du Centre d'Economie de la Sorbonne 19017, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    4. Jackson, Matthew O. & Lã“Pez-Pintado, Dunia, 2013. "Diffusion and contagion in networks with heterogeneous agents and homophily," Network Science, Cambridge University Press, vol. 1(1), pages 49-67, April.
    5. Matthew O. Jackson & Brian W. Rogers & Yves Zenou, 2016. "Networks: An Economic Perspective," Papers 1608.07901, arXiv.org.
    6. Lamberson PJ, 2010. "Social Learning in Social Networks," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-33, August.
    7. Zenou, Yves, 2012. "Networks in Economics," CEPR Discussion Papers 9021, C.E.P.R. Discussion Papers.
    8. Pongou, Roland & Serrano, Roberto, 2016. "Volume of trade and dynamic network formation in two-sided economies," Journal of Mathematical Economics, Elsevier, vol. 63(C), pages 147-163.
    9. Andrea Galeotti & Brian W. Rogers, 2013. "Strategic Immunization and Group Structure," American Economic Journal: Microeconomics, American Economic Association, vol. 5(2), pages 1-32, May.
    10. Liu, Xiaodong & Patacchini, Eleonora & Zenou, Yves & Lee, Lung-Fei, 2011. "Criminal Networks: Who is the Key Player?," Research Papers in Economics 2011:7, Stockholm University, Department of Economics.
    11. Cabrales, Antonio & Calvó-Armengol, Antoni & Zenou, Yves, 2011. "Social interactions and spillovers," Games and Economic Behavior, Elsevier, vol. 72(2), pages 339-360, June.
    12. Elias Carroni & Paolo Pin & Simone Righi, 2020. "Bring a Friend! Privately or Publicly?," Management Science, INFORMS, vol. 66(5), pages 2269-2290, May.
    13. Allouch, Nizar, 2015. "On the private provision of public goods on networks," Journal of Economic Theory, Elsevier, vol. 157(C), pages 527-552.
    14. Liu, Xiaodong & Patacchini, Eleonora & Zenou, Yves, 2013. "Peer Effects: Social Multiplier or Social Norms?," CEPR Discussion Papers 9366, C.E.P.R. Discussion Papers.
    15. Förster, Manuel & Grabisch, Michel & Rusinowska, Agnieszka, 2013. "Anonymous social influence," Games and Economic Behavior, Elsevier, vol. 82(C), pages 621-635.
    16. Zenou, Yves, 2011. "Spatial versus Social Mismatch: The Strength of Weak Ties," Research Papers in Economics 2011:5, Stockholm University, Department of Economics.
    17. Carlos Lever Guzmán, 2010. "Strategic Spending in Voting Competitions with Social Networks," Working Papers 2010-16, Banco de México.
    18. Lindquist, Matthew J. & Zenou, Yves, 2019. "Crime and Networks: 10 Policy Lessons," IZA Discussion Papers 12534, Institute of Labor Economics (IZA).
    19. Doh‐Shin Jeon & Yassine Lefouili, 2018. "Cross‐licensing and competition," RAND Journal of Economics, RAND Corporation, vol. 49(3), pages 656-671, September.
    20. Bryan S. Graham, 2015. "Methods of Identification in Social Networks," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 465-485, August.

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:17743. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.