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AuthorMoh’d, Al-Azzam
AuthorParmeter, Christopher F.
AuthorSarangi, Sudipta
Available date2023-02-12T07:15:11Z
Publication Date2020-05-04
Publication NameEconomic Modelling
Identifierhttp://dx.doi.org/10.1016/j.econmod.2020.04.027
CitationParmeter, C. F., & Sarangi, S. (2020). On the complex relationship between different aspects of social capital and group loan repayment. Economic Modelling, 90, 92-107.
ISSN0264-9993
URIhttps://www.sciencedirect.com/science/article/pii/S0264999319312350
URIhttp://hdl.handle.net/10576/39959
AbstractDo all aspects of social capital improve repayment behavior in group lending programs? The group lending literature typically uses one or few measures of social capital in a linear form, and systematically understates the uncertainty of results and model specifications. As a result, many papers conclude that specific measures of social capital do not matter. This paper introduces Bayesian Model Averaging to the group lending literature and simultaneously tests the validity of six different measures of social capital. While the initial analysis suggests that only few measures matter, this result becomes invalid when using model selection criteria and Bayesian Model Averaging while allowing for nonlinearity and interactions between different aspects of social capital. We find geographical proximity, trust, friendship, group homogeneity, and acquaintanceship to be important factors in explaining group repayment with mixed evidence for relatives. Our results suggest that microfinance institutions should target borrowing groups with more social capital.
Languageen
PublisherElsevier
SubjectMicrofinance
Group lending
Social capital
Count data
Bayesian model averaging
TitleOn the complex relationship between different aspects of social capital and group loan repayment
TypeArticle
Pagination92-107
Volume Number90
ESSN1873-6122
dc.accessType Abstract Only


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