Closing the gap: the link between social capital and microfinance services

Lopez-Rodriguez, Patricia and De la Torre Garcia, Rodolfo (2000): Closing the gap: the link between social capital and microfinance services.

Abstract

Social capital has strengthened the solidarity funds when the legal mechanisms and institutions for monitoring and assistance are not present. The aim of this paper is to analyze the effect of social capital on productivity and performance of microfinance’s cooperatives using the Mexican solidarity funds. For this, an estimator indirectly associated with inequality was obtained and extrapolation method was used. The results show that if the social capital rises 1%, the number of loans and the savings amount increases in percentage terms; for each additional producer that activates its social capital with its partners there will be a general increase in loans recoveries. In this sense, a greater investment in social capital will recover a larger amount of borrowed funds and will increase savings and loans to poor producers.

• Item Type: MPRA Paper
• Language: English
• Keywords: Keywords: social capital, microfinances, financial cooperatives, market failures, asimetric information, relationships, networks.
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O18 - Urban, Rural, Regional, and Transportation Analysis ; Housing ; Infrastructure; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, Operations, and Impact; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification; N - Economic History > N2 - Financial Markets and Institutions > N26 - Latin America ; Caribbean; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology ; Computer Programs > C81 - Methodology for Collecting, Estimating, and Organizing Microeconomic Data ; Data Access; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

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