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Microfinance and social capital in Nepal: the case for an integrated approach
Conference paper   Peer reviewed

Microfinance and social capital in Nepal: the case for an integrated approach

Ratna Paudyal, Anne Abraham and Wayne Fallon
Proceedings of the 2nd International Conference of the Nepalese Academy of Management, pp.305-320
International Conference of the Nepalese Academy of Management (NAM), 2nd (Kathmandu, Nepal, 10-Mar-2013–12-Mar-2013)
Buddha Academic Enterprises
2013
url
http://eprints.usq.edu.au/23303/3/NAM2013.pdfView
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Abstract

Applied Economics microfinance integrated approach social capital Nepal developing countries
While microfinance is often used in developing countries as a poverty alleviation tool, many studies of microfinance programs question its effectiveness as a genuine means of alleviating poverty and developing social capital. A growing body of literature has more recently identified problems with microfinance brought about by the apparent misuse of loans by the finance recipients, pointing to recipients who have found themselves compelled to use the loan to fund necessary health care and other basic needs. Increasing evidence indicates that minimal support is not enough to assist impoverished people. This is because the causes of poverty are multidimensional and the recipients need more than finance to break the cycle of poverty. This paper proposes that, in order for microfinance to make a significant and worthwhile contribution to the lives of impoverished people and their communities, microfinance programs need to take a more holistic or integrated approach, where the provision of microfinance should support the recipient's productive use of the loan, and their capacity to repay the loan from that productive use. This paper describes a research project that seeks to understand how the provision of integrated microfinance in Nepal could contribute to the development of social capital in that country and hence assist in overcoming poverty and its related issues.

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