How Values Create Value: Social Capital in Microfinance - The Case of the Philippines

Case study
Date Published: 
May 2000
Seibel, H., Llanto, G. & Quinones, B.

Is social capital the magic formula for the success of the Grameen model?

This paper examines the case of the Philippines to assess the probability of successfully replicating the Grameen approach.

The paper discusses:

  • The importance of norms in microfinance;
  • Regulation and supervision as key interrelated issues;
  • The definition of social capital as the shared normative system of an organization;
  • Measurement of the value of social capital in microfinance;
  • Three assessment criteria for the value of social capital in microfinance institutions (MFIs)  viability, sustainability and outreach;
  • The transition from financial repression as negative social capital to  of positive social capital in the Philippines;
  • The pitfalls of deregulation;
  • Prudential regulation and supervision in the Philippines.

It then examines:

  • The success of the Grameen Bank in Bangladesh and its self-regulated normative framework;
  • The possibility of effective replication of the Grameen model in other countries;
  • Grameen replicators in the Philippines, their struggle for donor funds and viability;
  • Two case studies of successful Grameen replicators in the Philippines.

The paper concludes that Grameen replicators are not always sustainable and do not reach the poor in sufficient numbers. However, successful replicators follow certain sound practices that are the hard core, social capital of the original Grameen approach.

Case study
Governance, Policy