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The Influence of Collectivism on Microfinance in Senegal

Entrepreneurship and Development in the 21st Century

ISBN: 978-1-78973-234-4, eISBN: 978-1-78973-233-7

Publication date: 15 April 2019

Abstract

Microfinance, despite its mixed results in economic literature, continues to proliferate in many developing countries. This research project investigates the relationship between collectivism and microfinance. It analyzes the question: how does a collectivist culture and its norms influence the ways in which borrowers spend loaned funds and interact with microfinance institutions (MFIs)? The authors generate a theoretical model for how norms of informal redistribution affect borrowing decisions and use a robust dataset of all of the loans facilitated by Kiva, a global MFI, to compare microloan borrowing in countries with different cultures of collectivism. A case study of Senegal, a culturally collectivist country, includes surveys and detailed interviews of individuals and MFIs. The authors find that the strong social networks associated with collectivism are well adapted to the structures of many MFIs. However, the authors also uncover that some of the collectivist social norms, such as norms of informal redistribution, can deter individuals from using microfinance.

Keywords

Acknowledgements

Acknowledgments

We gratefully acknowledge financial support from the Kenneth I. Juster Fellowship and logistical support from Clare Putnam. We also thank Andrei Shleifer and Susan Kask for significant advising, suggestions, and general support with the research project. Hassana Diallo and Seidou Diallo provided in-country assistance and translated interviews.

Citation

Scanlon, C.C., Scanlon, K. and Scanlon, T. (2019), "The Influence of Collectivism on Microfinance in Senegal", Sergi, B.S. and Scanlon, C.C. (Ed.) Entrepreneurship and Development in the 21st Century (Lab for Entrepreneurship and Development), Emerald Publishing Limited, Leeds, pp. 139-160. https://doi.org/10.1108/978-1-78973-233-720191009

Publisher

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Emerald Publishing Limited

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