The Group-lending Model and Social Closure: Microcredit, Exclusion, and Health in Bangladesh

Abstract

According to social exclusion theory, health risks are positively associated with involuntary social, economic, political and cultural exclusion from society. In this paper, a social exclusion framework has been used, and available literature on microcredit in Bangladesh has been reviewed to explore the available evidence on associations among microcredit, exclusion, and health outcomes. The paper addresses the question of whether participation in group-lending reduces health inequities through promoting social inclusion. The group-lending model of microcredit is a development intervention in which small-scale credit for income-generation activities is provided to groups of individuals who do not have material collateral. The paper outlines four pathways through which microcredit can affect health status: financing care in the event of health emergencies; financing health inputs such as improved nutrition; as a platform for health education; and by increasing social capital through group meetings and mutual support. For many participants, the group-lending model of microcredit can mitigate exclusionary processes and lead to improvements in health for some; for others, it can worsen exclusionary processes which contribute to health disadvantage.

Economic Impact of Development Initiatives on Low-Income Households in Kelantan, Malaysia

“…This finding was consistent with previous studies conducted in Malaysia (Al-Mamun et al 2014), India (Ray-Bennett 2010), Bangladesh (Schurmann and Johnston 2009), and Turkey (Khandker 2001;Gurses 2009). The main finding suggested that micro-credit and training programs were discovered to influence the household income and level of economic vulnerability, which heralded useful information for formulating economic and social policies as well as poverty eradication programs, especially for low-income households in Kelantan.…”

“…Vulnerability includes income poverty, asset poverty, and a risk exposure to political, natural, and economic risk. In response to this issue, both access to micro-credit and training program are to minimize the economic vulnerability among low-income participants (Al-Mamun et al 2014;Ray-Bennett 2010;Schurmann and Johnston 2009).…”

Implications of gender and household roles in Indigenous Maya communities in Guatemala for child nutrition interventions

“…Both men and women endorsed the role of men as exclusive economic providers, but women often went on to recount the strategies they used to supplement the stipends from their husbands with their own earnings. The importance of supplemental household income generated by mothers in rural Guatemala has been documented before (Ehlers, 2010) and, in other contexts, increasing the ability of mothers to generate supplemental income, especially through microcredit or microfinance mechanisms, has correlated with positive nutritional outcomes (Hampshire, Casiday, Kilpatrick, & Panter-Brick, 2009;Morduch & Haley, 2002;Schurmann & Johnston, 2009). Interestingly, despite a large microfinance movement in Guatemala, these linkages to nutrition programming have not historically been strong.…”

Social Collateral Model for Islamic Microfinance

“…Armendariz and Morduch (2005) stated that group pressure plays a significant role in encouraging group members to repay their loan. Schurmann and Johnston (2009) claimed that the use of group lending approach and group pressure is to ensure success loan repayment by the microfinance recipients. It has been argued that group pressure is used as disciplinary and support mechanism within microcredit (Abbink, Irlenbusch and Renner, 2002).…”