Social Capital Dimensions and other Determinants Influencing Household Participation in Micro-credit Groups in Uasin Gishu County, Kenya

Abstract

This paper examined the social capital dimensions and other determinants influencing household participation and level of participation in micro-credit groups in Uasin Gishu County, Kenya specifically Moiben division. In the study area, the microfinance institutions and other lending organizations have extended credit facilities to households through individual and group lending schemes in their bid to increase household access to credit. However, even with the recent proliferation of micro-credit groups a considerable proportion of the poor households in the area have not joined micro-credit groups. A structured questionnaire was used to gather information from 174 households from the division, using the multistage sampling technique. Heckman selection model was applied to identify factors that influenced households to join and the level of participation in the micro-credit group. The results indicate that age, gender, education farm size, household size, farm income and distance to the nearest financial institution influenced household decision to join the micro-credit groups. On the other hand age, farm size, total income, heterogeneity index, density of membership, years of experience in group borrowing and decision making index significantly influenced the level of participation. Based on the findings policy implications were drawn for improving household access to credit in the study areas.

Key words: Access to credit, group lending, social capital and Heckman selection model