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Do socially motivated self‐help groups perform better? Exploring determinants of micro‐credit groups’ performance in Eastern India
Author(s) -
Pal Anirban,
Singh Piyush Kumar
Publication year - 2021
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/apce.12304
Subject(s) - sustainability , loan , collective action , receipt , empowerment , business , affect (linguistics) , finance , economics , public economics , economic growth , political science , accounting , sociology , ecology , communication , politics , law , biology
Group‐based micro‐credit initiatives, as part of the broader social and solidarity‐based finance initiatives, have gained prominence over the past decade, especially in developing economies like India. Lending to the poor, especially women, through micro‐credit groups, are significantly associated with the utilization of commons. Apart from their financial operations, self‐help groups promote social empowerment activities and collective action following a dual bottom‐line approach. However, the causal role of the group's motivation towards pursuing social objectives has not been explored in the past. The present study, therefore, investigates the interlinkages between the group's intrinsic motivation and efficiency using an innovative two‐stage double bootstrapped DEA‐based methodology. Results from the study affirm that apart from traditional factors like maturity, accessibility and group management, the motivation of the group is a crucial determinant of social efficiency. Additionally, the group's loan‐to‐savings ratio and receipt of cash payments significantly affect its long‐term financial sustainability. Micro‐credit groups cannot contribute sustainably as a viable alternative to traditional means of access to credit if it merely offers innovative forms of financing and consumption. They need to be socially aligned to serve the community better and contribute to the group's overall performance and galvanize community‐based resource management.