Microcredit and building social capital in rural Bangladesh – drawing the uneasy link

Abstract

In the 1990s, social capital and the group-based microcredit programme emerged as major planks of developmental interventions, and both approaches have underscored the necessity to mobilize social factors in the alleviation of poverty and social solidarity. The group-based microcredit model is considered an effective policy instrument for increasing women's access to financial capital and for strengthening their social capital at the local level. This study contributes to the continuing debate over how or if group-based microcredit facilitates to the formation of social capital at the local level in Bangladesh. Case studies and ethnographic (in-depth) interviews of 151 women microcredit borrowers of the Grameen Bank and the Bangladesh Rural Advancement Committee of Bangladesh were used in this study. The study suggests that the relationship between participation in the group-based microcredit programme and the facilitation of social capital at the local level is at best ambiguous. The assumed association between microcredit membership and building social capital (social networks, norms of reciprocity and collective identity and action) is much less prominent than commonly suggested by many previous scholars and development practitioners.

Keywords:

• microcredit
• networks
• reciprocity
• solidarity
• social capital
• Bangladesh

Acknowledgements

I am grateful to Sirpa Tenhunen for her encouraging, skilful supervision and constructive comments on the PhD dissertation from which this article is drawn. I also thank both Sirpa Tenhunen and Minna Sääväla for their helpful comments on the first draft of this article. This study was made possible by research funding from the Academy of Finland [grant no. SA 138232] and a scholarship from the Jenny and Antti Wihuri Foundation. I would like to thank the funding agencies for their support.

Notes

1. The term ‘group lending’ generally means a process whereby individual loans are given to a small, self-selected and homogenous group of borrowers (five to seven members) who are collectively responsible to loan repayment.

2. A bari is a collection of households which are divided and sub-divided, and they are almost always patrilineally linked (Gardner 1992; Todd 1996). Bari clusters together form a para or neighbourhood (Todd 1996).