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Is Trust a Necessity? - A case study of group lending within microfinance in the Mbarara district, Uganda

Göransson, Karin LU and Östergren, Anna LU (2010) NEKK01 20092
Department of Economics
Abstract
One reason for poverty is that many people are denied access to financial markets. A new alternative way of providing credit to people living in a vulnerable economic situation is microfinance. Microfinance has often been a success story and one explanation has often been the impact of social capital.

This thesis investigates the relationship between social capital and microfinance. Do individuals and groups with a higher social capital perform better in the context of microfinance; do they receive more loans as implied in theory? The aim is to review the impact of the different dimensions and types of social capital on the success of microfinance. To evaluate this, our study was conducted in the Mbarara district in the southern part of... (More)
One reason for poverty is that many people are denied access to financial markets. A new alternative way of providing credit to people living in a vulnerable economic situation is microfinance. Microfinance has often been a success story and one explanation has often been the impact of social capital.

This thesis investigates the relationship between social capital and microfinance. Do individuals and groups with a higher social capital perform better in the context of microfinance; do they receive more loans as implied in theory? The aim is to review the impact of the different dimensions and types of social capital on the success of microfinance. To evaluate this, our study was conducted in the Mbarara district in the southern part of Uganda, in cooperation with The Foundation for International Community Assistance (FINCA). To gather the information we attended 34 group meetings where three members in each group answered our questionnaire. To be able to use the information we use econometric methods.

The results of this study make it hard to draw any general conclusions about the impact of social capital. They indicate that individuals with relatively lower trust are better off in terms of received loans. Higher education and collective action also have a positive impact on the number of loans a participant receives. In terms of number of received loans, it is better to be a man. (Less)
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author
Göransson, Karin LU and Östergren, Anna LU
supervisor
organization
course
NEKK01 20092
year
type
M2 - Bachelor Degree
subject
keywords
Uganda, poverty, market failure, microfinance, social capital.
language
English
id
1600954
date added to LUP
2010-05-17 11:10:50
date last changed
2010-05-17 11:10:50
@misc{1600954,
  abstract     = {One reason for poverty is that many people are denied access to financial markets. A new alternative way of providing credit to people living in a vulnerable economic situation is microfinance. Microfinance has often been a success story and one explanation has often been the impact of social capital.

This thesis investigates the relationship between social capital and microfinance. Do individuals and groups with a higher social capital perform better in the context of microfinance; do they receive more loans as implied in theory? The aim is to review the impact of the different dimensions and types of social capital on the success of microfinance. To evaluate this, our study was conducted in the Mbarara district in the southern part of Uganda, in cooperation with The Foundation for International Community Assistance (FINCA). To gather the information we attended 34 group meetings where three members in each group answered our questionnaire. To be able to use the information we use econometric methods. 

The results of this study make it hard to draw any general conclusions about the impact of social capital. They indicate that individuals with relatively lower trust are better off in terms of received loans. Higher education and collective action also have a positive impact on the number of loans a participant receives. In terms of number of received loans, it is better to be a man.},
  author       = {Göransson, Karin and Östergren, Anna},
  keyword      = {Uganda,poverty,market failure,microfinance,social capital.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Is Trust a Necessity? - A case study of group lending within microfinance in the Mbarara district, Uganda},
  year         = {2010},
}