Public Good Provision in Indian Rural Areas: the Returns to Collective Action by Microfinance Groups

Paolo Casini (), Lore Vandewalle and Zaki Wahhaj

Studies in Economics from School of Economics, University of Kent

Abstract: Self-help groups (SHGs) are the most common form of microfinance in India. We provide evidence that SHGs, composed of women only, undertake collective actions for the provision of public goods. Using a theoretical model, we show that an elected official, whose aim is to maximise re-election chances, would exert higher effort in providing public goods when private citizens undertake collective action and coordinate their voluntary contributions towards the same goods. This effect occurs although government and private contributions are assumed to be perfect substitutes. Using first-hand data on SHGs in India, we test the predictions of the model and show that, in response to collective action by SHGs, local authorities tackle a larger variety of public issues, and are more likely to tackle issues of interest to SHGs.

JEL-codes: D70 G21 H42 (search for similar items in EconPapers)
Date: 2015-01
New Economics Papers: this item is included in nep-agr, nep-cdm and nep-mfd
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Public Good Provision in Indian Rural Areas: The Returns to Collective Action by Microfinance Groups (2017)
Working Paper: Public Good Provision in Indian Rural Areas: The Returns to Collective Action by Microfinance Groups (2015)
Working Paper: Public good provision in Indian rural areas: the returns to collective action by microfinance groups (2015)
Working Paper: Public Good Provision in Indian Rural Areas: the Returns to Collective Action by Microfinance Groups (2011)
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