Social capital formation and credit access: Evidence from Sri Lanka

Shoji, M. and Aoyagi, K. and Kasahara, R. and et al, . (2012) Social capital formation and credit access: Evidence from Sri Lanka. World Development, 40 (2). pp. 2522-2536.

[img] PDF - Published Version
Restricted to ICRISAT researchers only


While previous studies evaluate the impact of social capital on development outcomes, there are very few empirical studies on determinants of social capital formation. We use unique long panel data from Sri Lanka to examine the mechanism of social capital formation in an imperfect credit market. We show that households facing credit constraints reduce investments in social capital. Furthermore, temporal declines in investment persistently reduce general trust, trust in villagers, and trust in business partners. While previous studies argue that social capital improves access to informal credit, we show the reverse causality. Combining these findings suggests a potential poverty trap

Item Type: Article
Uncontrolled Keywords: Social capital formation; credit constraints; infrastructure; South Asia; Sri Lanka
Author Affiliation: Seijo University, Tokyo, Japan
Subjects: Social Sciences
Divisions: General
Depositing User: Ms K Syamalamba
Date Deposited: 06 Mar 2014 09:23
Last Modified: 06 Mar 2014 09:23
Official URL:

Actions (login required)

View Item View Item