Socially Disadvantaged Groups and Microfinance in India

Jean-Marie Baland (), Rohini Somanathan () and Lore Vandewalle ()

No 1117, Working Papers from University of Namur, Department of Economics

Abstract: In this paper we provide an empirical analysis of the 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 members of lower castes or landless farmers, are less likely to have access to groups. We also analyze their performance in terms of access to bank loans, which is an important benefit of the groups. We nd evidence of the attrition process being selective against lower castes: they have a lower probability of becoming a permanent member of a group. The net effects in terms of their expected access to a bank loan remain however relatively limited. By contrast, even though landless farmers are more likely to fail or leave the groups, they tend to bene t disproportionately. In expected terms, they receive more than two times the amounts of bank loans given to farmers owning more than one acre. Overall, the program therefore has positive and important distributional implications.

New Economics Papers: this item is included in nep-ban, nep-dev and nep-mfd
Date: 2011-12
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