The Role of Social Capital in Microfinance

by Mashudul Hasan

Institution: Roskilde University
Year: 2015
Keywords: Social Capital; Microfinance
Posted: 02/05/2017
Record ID: 2132750
Full text PDF: http://rudar.ruc.dk/handle/1800/23910


Bangladesh is the fertile land of microfinance. Grameen Bank and BRAC are the leading microfinance organization in the world. Microfinance is one of the effective tools for alleviating poverty. Microfinance in Bangladesh empowers women, increases standard of living, alleviates poverty and creates social capital. Microfinance institutions also use the proxies of social capital such as bonding, bridging, norms of norms of reciprocity and networks and thus these instituitons perform microfinance activities smoothly for attainging sustainable development. However, general criticism is that microfinance is not for all the poor. Besides, general consus goes against microfinance is that microfinance in reality, microfinance does not empower women and increase standard of living. The focus of this thesis is to explore the role of microfinance for increasing standard of living, empowering rural women and alleviating poverty from the rural part of Bangladesh. Besides, exploring the role of social capital in microfinance that strengthens microfinance institutions to achieve their mission because microfinance institutions replaces physical capital and introduces social capital for approving micro loans. I must emphasize that I am more interested in the role of microfinance in improving living standards, empowerment and poverty alleviation of the marginalized community of Bangladesh. This thesis is based on a qualitative study and a small-scale field study in Bangladesh conducted in the end of the May 2015. The small-scale field study provided answers to the research question. The methods used in the field were mainly questionnaire that has been attached in the appendix. Primary data is collected through semi-structured interviews. The theoretical framework is based on written literature about Putnam’s Social Capital. I tried to get a better understanding of them whicle conducting interviews and therefore, the native language (Bangla). The results that have been analysed with microfinance and social capital permit the following conclusions: Microfinance puts contribution to increase in standard of living of poor people, empower women and reduce poverty. However, some consensuses are that microfinance is not the effective tool for increasing standard of living, empowering women and alleviating poverty. Nonetheless, Bangladesh is the ardent spirit where microfinance puts contribution to raise standard of living, empower women and alleviate poverty. Alongside, the role of social capital is focused in microfinance and microbank (case study) here operates its activities successfully by using its networks such as palli shomaj, local branch offices and local government organizations. Most of the interviewees reported that microfinance brought positive changes in their lives that empowered them, increased standard of living and reduced their poverty. Some of the interviewees reported that microfinance did not bring any positive change in their lives even one of the interviewee was concerned to fall in vicious cycle of poverty. Advisors/Committee Members: Svensson, Christian Franklin (advisor).