Measuring trust in poor communities
| Areas | : | Rural development and agriculture |
|---|---|---|
| Researcher/s in charge | : | Martin Valdivia |
| Execution time | : | January 2006 |
Presentation
The goal of this study is to measure trust and social networks in poor communities. It has two main objectives: (i) design a credit product that reaches people that normally do not have many credit options, and (ii) better understand how social networks and trust function in poor communities to help design social programs that can take advantage of these relationships.
The project design employs members of village banks (made up largely of women) as co-signers for loans made to other members of their community. The field work is taking place in the towns near the city of Huaraz and includes surveys that seek to understand with whom the bank members spend their time within their communities. The work is beginning in three communities with the goal of expanding to 30.
This information will help to understand who the people are that the bank members choose to sponsor. For example, if they choose to sponsor only their friends or family members, or if they also sponsor friends of friends and other people less close to them. It will also help to understand how this hybrid group/individual microcredit model works to strengthen and take advantage of the social networks within the community. For this reason, the interest rates offered will vary for every potential client-sponsor pair and the information about loan take-up will be combined with the information about social networks and used to understand how important trust is in these communities.
