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Micro-Finance and Rural Enterprises: An Analysis of Operational Performance and Constraints in the SHG-Bank Linkage Program in India

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  • Sudhir Jain
  • K. Tripathy

Abstract

This paper investigates the interrelationship within community’s business environment and the operational characteristics of community-owned economic units. Drawing upon a field level survey conducted in 2006–07 in two districts each of Haryana and Orissa states of India, this paper examines the suitability of government-directed micro-finance strategy and the role of the community level Self-Help Groups (SHGs) in the flow of micro-finance to rural micro-enterprises. While determining the underlying factors impacting the governance of SHGs and their performance of economic ventures in a rural business environment, the paper outlines low financial base, non-provision of socio-economic incentives to members and the lack of group commitment to task accomplishment as the main problem areas of resource flow to the micro-enterprises. The results underline the need for an integrated approach to program governance and conclude with policy lessons for improving the implementation of micro-finance driven self-employment programs in rural areas. Copyright Eurasia Business and Economics Society 2011

Suggested Citation

  • Sudhir Jain & K. Tripathy, 2011. "Micro-Finance and Rural Enterprises: An Analysis of Operational Performance and Constraints in the SHG-Bank Linkage Program in India," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 1(1), pages 29-50, June.
    • Handle: RePEc:spr:eurase:v:1:y:2011:i:1:p:29-50
    DOI: 10.14208/BF03353823
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    1. Kenneth Kaoma Mwenda & Gerry Nkombo Muuka, 2004. "Towards best practices for micro finance institutional engagement in African rural areas: Selected cases and agenda for action," International Journal of Social Economics, Emerald Group Publishing, vol. 31(1/2), pages 143-158, January.
    2. Hossain, Mahabub, 1988. "Credit for alleviation of rural poverty: the Grameen Bank in Bangladesh," Research reports 65, International Food Policy Research Institute (IFPRI).
    3. Matin, Imran & Hulme, David, 2003. "Programs for the Poorest: Learning from the IGVGD Program in Bangladesh," World Development, Elsevier, vol. 31(3), pages 647-665, March.
    4. Mahjabeen, Rubana, 2008. "Microfinancing in Bangladesh: Impact on households, consumption and welfare," Journal of Policy Modeling, Elsevier, vol. 30(6), pages 1083-1092.
    5. McKee, Katharine, 1989. "Microlevel strategies for supporting livelihoods, employment, and income generation of poor women in the third world: The challenge of significance," World Development, Elsevier, vol. 17(7), pages 993-1006, July.
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    Cited by:

    1. Trong Ngo & Andrew Mullineux & Anh Ly, 2014. "The impact of scale of operation on financial performance in microfinance," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 4(2), pages 177-198, December.
    2. Mohamed Mekki Ben Jemaa & Sahar Obey, 2018. "On the Trade-off Between Size, Sustainability and Social Outcome of the Microfinance Institutions: A Two Stages Bootstrapped DEA Approach," Working Papers 1246, Economic Research Forum, revised 28 Oct 2018.

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    More about this item

    Keywords

    Micro-finance; Micro-enterprise; Self-employment; SHG; India; O20; O22; O53; D53;
    All these keywords.

    JEL classification:

    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets

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