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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.

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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.

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