Measuring effectiveness of social capital in microfinance: A case study of urban microfinance programme in India

Abstract

Creation and use of social capital is considered to be one of the emerging tools of development programmes. It is valued as one of the vital link to replace physical capital with social intermediation in microfinance. The paper analyses the meaning and role of social capital with specific reference to microfinance programme and tries to measure its impact on social empowerment of women with the help of empirical findings. The paper is based on primary data collected of 217 women Self Help Group (SHG) members by using random sample method from the SHGs organized by Forbes Marshall Co. Ltd, a leading manufacturing company in Pune, Maharashtra, India as an initiative of corporate social responsibility. A Likert scale is used to find the perceptions of SHG members about the changes which microfinance programme has brought out in their lives with respect to 15 parameters related to awareness building, capacity building and active and collective participation in social and political life to bring out desirable changes. The paper concludes that microfinance programme implemented by the organization has created a social capital which has an empowering effect on SHG members. The paper suggests that creation of social capital is not an automatic outcome and the organizations have to create and nurture it deliberately by implementing specific policies such as capacity building programmes, developing decision making abilities, etc.