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On the complex relationship between different aspects of social capital and group loan repayment
- Source :
- Economic Modelling. 90:92-107
- Publication Year :
- 2020
- Publisher :
- Elsevier BV, 2020.
-
Abstract
- Do 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.
- Subjects :
- Economics and Econometrics
Microfinance
050208 finance
Group (mathematics)
Model selection
Homogeneity (statistics)
media_common.quotation_subject
05 social sciences
Bayesian inference
law.invention
Friendship
law
0502 economics and business
Economics
Econometrics
050207 economics
Social capital
Count data
media_common
Subjects
Details
- ISSN :
- 02649993
- Volume :
- 90
- Database :
- OpenAIRE
- Journal :
- Economic Modelling
- Accession number :
- edsair.doi...........40709045eaa933a01d3be879ce3a31ab