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Bagli, Supravat
- Microcredit-Microsavings Interlinkage:An Explanation
Authors
1 Department of Economics, Presidency University, Kolkata, IN
Source
The Microfinance Review, Vol 8, No 1 (2016), Pagination: 90-97Abstract
Group-centric lending has now been recognised as a well known instrument to provide access to formal credit to the poor section across the globe. A series of theoretical studies have tried to explain how the joint liability aspect of group lending mitigates the problems of asymmetric information and thereby expand access to affordable formal credit for the poor. However, study relating to the role of other features of the group-centric lending like direct monitoring by the lender, recurrent savings, peer monitoring, peer selection on over all welfare are less common in literature. With the framework of SHG-PACCS linkage model in India this study analyse how recurrent savings and peer monitoring ensure the access to formal credit for the poor and thereby improve social welfare. This study has also shown that intensity of borrowing in this model excessively depend on cumulative savings of the particular borrower.Keywords
Group-Centric Lending, Self-Help Groups, Social Welfare.
- Self-Help Groups and Borrowing Cost An Empirical Study Addressing Endogeneity Problem
Authors
1 Department of Economics, Burdwan University, West Bengal, IN
2 Deshabandhu Mahavidyalaya Chittaranjan, Burdwan, West Bengal, IN
Source
The Microfinance Review, Vol 4, No 1 (2012), Pagination: 69-85Abstract
Restricted access to formal credit and high cost of borrowing from informal source is a familiar problem to the rural poor borrowers. In the recent years Self-Help Group (SHG) based microfinance programme in India has been functioning against this problem. Addressing the problem of endogeneity, this study has assessed the impact of the participation in SHG on access to formal credit and on borrowing cost. It has also examined whether the SHGs serve the disadvantaged section of people or not. In order to study the nature of accessibility to formal credit we have formulated a logit model. We have fitted a semi-log linear model for assessing the borrowing cost. A probit model has been applied to estimate the decision to participate in SHG. A test for endogeneity related with the participation in SHG has also been conducted. This empirical study is based on a set of primary data collected from 964 rural households residing in the district of Bankura in West Bengal, India. Empirical analysis demonstrates that participation in SHG accelerates the access to formal credit and reduces the borrowing cost for the disadvantaged section of people. It reveals the absence of endogeneity problem relating to the participation in SHG.