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

Author

Listed:
  • Brian P. Greaney
  • Joseph P. Kaboski
  • Eva Van Leemput
Abstract
We provide an experimental and theoretical evaluation of a cost-reducing innovation in the delivery of "self-help group" microfinance services, in which privatized agents earn payments through membership fees for providing services. Under the status quo, agents are paid by an outside donor and offer members free services. In our multi-country randomized control trial, we evaluate the change in this incentive scheme on agent behaviour and performance, and on overall village-level outcomes. We find that privatized agents start groups, attract members, mobilize savings, and intermediate loans at similar levels after a year but at much lower costs to the NGO. At the village level, we find higher levels of borrowing, business-related savings, and investment in business. Examining mechanisms, we find that self-help groups serve more business-oriented clientele when facilitated by agents who face strong financial incentives.

Suggested Citation

  • Brian P. Greaney & Joseph P. Kaboski & Eva Van Leemput, 2016. "Can Self-Help Groups Really Be "Self-Help"?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(4), pages 1614-1644.
    • Handle: RePEc:oup:restud:v:83:y:2016:i:4:p:1614-1644.
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    File URL: http://hdl.handle.net/10.1093/restud/rdw004
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    2. Paolo Casini & Lore Vandewalle & Zaki Wahhaj, 2017. "Public Good Provision in Indian Rural Areas: The Returns to Collective Action by Microfinance Groups," The World Bank Economic Review, World Bank, vol. 31(1), pages 97-128.
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    5. Orazio Attanasio & Britta Augsburg & Ralph De Haas & Emla Fitzsimons & Heike Harmgart, 2011. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," IFS Working Papers W11/20, Institute for Fiscal Studies.
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    7. Christian Ahlin & RobertM. Townsend, 2007. "Using Repayment Data to Test Across Models of Joint Liability Lending," Economic Journal, Royal Economic Society, vol. 117(517), pages 11-51, February.
    8. David de Meza & David C. Webb, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 281-292.
    9. Jessica Cohen & Pascaline Dupas, 2010. "Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(1), pages 1-45.
    10. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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    Cited by:

    1. Ksoll, Christopher & Lilleør, Helene Bie & Lønborg, Jonas Helth & Rasmussen, Ole Dahl, 2016. "Impact of Village Savings and Loan Associations: Evidence from a cluster randomized trial," Journal of Development Economics, Elsevier, vol. 120(C), pages 70-85.
    2. Emily Breza & Cynthia Kinnan, 2021. "Measuring the Equilibrium Impacts of Credit: Evidence from the Indian Microfinance Crisis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1447-1497.
    3. Diego Vera-Cossio, 2022. "Targeting Credit through Community Members," Journal of the European Economic Association, European Economic Association, vol. 20(2), pages 778-821.
    4. Heitzig, Chris & O’Keeffe-O’Donovan, Rossa, 2024. "Spillover Effects and Diffusion of Savings Groups," World Development, Elsevier, vol. 173(C).
    5. Francisco J. Buera & Joseph P. Kaboski & Yongseok Shin, 2015. "Entrepreneurship and Financial Frictions: A Macrodevelopment Perspective," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 409-436, August.
    6. Lori Beaman & Dean Karlan & Bram Thuysbaert, 2014. "Saving for a (not so) Rainy Day: A Ramdomized Evaluation of Savings Groups in Mali," Working Papers 1043, Economic Growth Center, Yale University.
    7. Paul Anand & Swati Saxena & Rolando Gonzales Martinez & Hai-Anh H. Dang, 2020. "Can Women’s Self-help Groups Contribute to Sustainable Development? Evidence of Capability Changes from Northern India," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 21(2), pages 137-160, April.
    8. Jiang, Liang & Phillips, Peter C.B. & Tao, Yubo & Zhang, Yichong, 2023. "Regression-adjusted estimation of quantile treatment effects under covariate-adaptive randomizations," Journal of Econometrics, Elsevier, vol. 234(2), pages 758-776.
    9. Mary Kay Gugerty & Pierre Biscaye & C. Leigh Anderson, 2019. "Delivering development? Evidence on self‐help groups as development intermediaries in South Asia and Africa," Development Policy Review, Overseas Development Institute, vol. 37(1), pages 129-151, January.
    10. Liang Jiang & Liyao Li & Ke Miao & Yichong Zhang, 2023. "Adjustment with Many Regressors Under Covariate-Adaptive Randomizations," Papers 2304.08184, arXiv.org, revised Feb 2024.
    11. Gonzales Martinez, Rolando & D’Espallier, Bert & Mersland, Roy, 2021. "Bifurcations in business profitability: An agent-based simulation of homophily in self-financing groups," Journal of Business Research, Elsevier, vol. 129(C), pages 495-514.
    12. Aggarwal, Shilpa & Francis, Eilin & Robinson, Jonathan, 2018. "Grain today, gain tomorrow: Evidence from a storage experiment with savings clubs in Kenya," Journal of Development Economics, Elsevier, vol. 134(C), pages 1-15.
    13. Francisco J. Buera & Joseph P. Kaboski & Yongseok Shin, 2020. "Taking Stock of the Evidence on Microfinancial Interventions," Review, Federal Reserve Bank of St. Louis, vol. 102(2), pages 173-202, May.
    14. Vandewalle, Lore, 2017. "The Role of Accountants in Indian Self-Help Groups: A Trade-off between Financial and Non-Financial Benefits," World Development, Elsevier, vol. 93(C), pages 177-192.
    15. Rachel Cassidy & Marcel Fafchamps, 2015. "Can community-based microfinance groups match savers with borrowers? Evidence from rural Malawi," CSAE Working Paper Series 2015-13, Centre for the Study of African Economies, University of Oxford.
    16. Cassidy, Rachel & Fafchamps, Marcel, 2020. "Banker my neighbour: Matching and financial intermediation in savings groups," Journal of Development Economics, Elsevier, vol. 145(C).
    17. Rolando Gonzales Martinez, 2021. "How good is good? Probabilistic benchmarks and nanofinance+," Papers 2103.01669, arXiv.org.
    18. Burlando, Alfredo & Canidio, Andrea, 2017. "Does group inclusion hurt financial inclusion? Evidence from ultra-poor members of Ugandan savings groups," Journal of Development Economics, Elsevier, vol. 128(C), pages 24-48.

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    More about this item

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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