School of Economics

2015 Discussion papers


School of Economics Discussion Paper 15/03


Public Good Provision in Indian Rural Areas: the
Returns to Collective Action by Microfinance Groups


Paolo Casini and Lore Vandewalle and Zaki Wahhaj
LICOS Center for Institutions and Economic Performance, Uniuversity of Namur and University of Kent


January 2015

Abstract:

Self-help groups (SHGs) are the most common form of microfinance in India. We provide evidence that SHGs, composed of women only, undertake collective actions for the provision of public goods. Using a theoretical model, we show that an elected official, whose aim is to maximise re-election chances, would exert higher effort in providing public goods when private citizens undertake collective action and coordinate their voluntary contributions towards the same goods. This effect occurs although government and private contributions are assumed to be perfect substitutes. Using first-hand data on SHGs in India, we test the predictions of the model and show that, in response to collective action by SHGs, local authorities tackle a larger variety of public issues, and are more likely to tackle issues of interest to SHGs.


JEL Classification: D70; G21; H42

To download the file in pdf format click here.

 

School of Economics, Keynes College, University of Kent, Canterbury, Kent, CT2 7NP

Undergraduate enquiries: +44 (0) 1227 827497, Postgraduate enquiries: +44 (0) 1227 827440 or email us

Last Updated: 12/03/2015