Micro-Finance and Social Capital: A Study Of Microfinance Institutions in Andhra Pradesh, India-2009

The study examines the economic and social impacts of microfinance program in Andhra Pradesh, India – the state which accounted for about one-fourth of the microfinance institutions in India. Using primary survey data, the study found that microfinance programs created high repayment rates but the economic impact in terms of net income was not substantial. The study explains this paradox in terms of multiple memberships in other MFIs and borrowing from non-institutional sources like money lenders which facilitates poor households to undertake double-dipping and cross-finance borrowings. But the study found women’s participation in microfinance programs helps to increase women empowerment and facilitate enhancement of social ties within the group and outside the group (in civil society). It also enabled them to undertake collective action against some of the loan-shark and unethical behavior of MFIs in the state.