Can Self-Help Groups Really Be "Self-Help"?

Brian Greaney, Joseph Kaboski and Eva Van Leemput (eva.vanleemput@frb.gov)

No 18970, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines a cost-reducing innovation to the delivery of "Self-Help Group" microfinance services. These groups typically rely on outside agents to found and administer the groups although funds are raised by the group members. The innovation is to have the agents earn their payment by charging membership fees rather than following the status quo in which the agents are paid by an outside organization and instead offer free services to clients. The theory we develop shows that such membership fees could actually improve performance without sacrificing membership, simply by mitigating an adverse selection problem. Empirically, we evaluate this innovation in East Africa using a randomized control trial. We find that privatized entrepreneurs providing the self-help group services indeed outperform their NGO-compensated counterparts along several dimensions. Over time, they cost the NGO less and lead more profitable groups; also, households with access to privately-delivered groups borrow and save more, invest more in businesses, and may have higher consumption. Consistent with the theory, these privatized groups attract wealthier, more business-oriented members, although they attract no fewer members.

JEL-codes: O1 O12 O16 (search for similar items in EconPapers)
Date: 2013-04
New Economics Papers: this item is included in nep-mfd and nep-soc
Note: DEV
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Brian P. Greaney & Joseph P. Kaboski & Eva Van Leemput, 2016. "Can Self-Help Groups Really Be "Self-Help"?," Review of Economic Studies, Oxford University Press, vol. 83(4), pages 1614-1644.

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Related works:
Journal Article: Can Self-Help Groups Really Be "Self-Help"? (2016)
Working Paper: Can Self-Help Groups Really Be 'Self-Help'? (2016)
Working Paper: Can self-help groups really be self-help? (2013)
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