Institutions and social capital in group lending

Alexeev M. Nurmakhanova M. Polishchuk L.I.
2021 Non-profit partnership Voprosy Ekonomiki

Russian Journal of Economics
2021 #7 Issue 4 269 - 296 pp.

Formal institutions and social capital interact with each other in multiple ways. We argue and show empirically at the cross-country level that in the case of group lending, contract enforcement complements bonding social capital and substitutes for bridging one. It means that payoff to social capital in group lending depends on social capital type and is contingent on the quality of contract enforcement which serves as a sorting factor, working in the opposite directions for different stripes of social capital. These results are robust to various estimations, sets of controls, and social capital measures.

Contract enforcement , Microfinance , Social capital

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Indiana University, Bloomington, IN, United States
Russian Presidential Academy of National Economy and Public Administration, Moscow, Russian Federation
KIMEP University, Almaty, Kazakhstan
HSE University, Moscow, Russian Federation

Indiana University
Russian Presidential Academy of National Economy and Public Administration
KIMEP University
HSE University

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