Working Paper: CEPR ID: DP10944
Authors: Jean-Marie Baland; Rohini Somanathan; Lore Vandewalle
Abstract: In this paper we provide an empirical analysis of the social composition and performance of microfinance groups, known as Self-Help Groups, based on an original census we carried out in a poor area of Northern India. We examine whether traditionally disadvantaged villagers, such as scheduled tribes and landless farmers, are as likely to draw benefits from these SHGs as other villagers. While the initial participation in the groups closely reflects the social composition of the village, we find evidence of a selective attrition process against scheduled tribes who are less likely to remain members. Their expected access to bank loans - which is the primary aim of those groups - is also much more limited. By contrast, landless farmers are over-represented in these groups. As a result, even though they are more likely to leave the groups, they tend to benefit disproportionately from the SHGs. In expected terms, they receive more than two times the amount of bank loans given to other farmers. Overall, the program has therefore non trivial but important distributional implications.
Keywords: India; Microfinance; Selective Attrition; Self-Help Groups
JEL Codes: G21; O1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| social composition (Z13) | group survival (C92) |
| social composition (Z13) | access to bank loans (G21) |
| caste and land status (P32) | group survival (C92) |
| caste and land status (P32) | access to bank loans (G21) |
| scheduled tribe members (J15) | group survival (C92) |
| scheduled tribe members (J15) | access to bank loans (G21) |
| landless farmers (Q15) | access to bank loans (G21) |
| socially homogeneous groups (C92) | group survival (C92) |
| socially homogeneous groups (C92) | access to bank loans (G21) |
| heterogeneous groups (B50) | group survival (C92) |
| heterogeneous groups (B50) | access to bank loans (G21) |
| education (I29) | group survival (C92) |
| education (I29) | access to bank loans (G21) |