Social capital and loan repayment performance in Southeast Asia

This paper analyses the effects of different forms of social capital on credit repayment behaviour. In the context of development economics an innovative data collection approach is used that originates from the field of sociology. A personal network survey is carried out to measure the individual social capital of borrowers. We distinguish four social capital variables between the respondent and his/her network members according to tie strength (bonding/bridging) and social distance (bondinglink/bridginglink). The effects of social capital vary according to socio-cultural context. For instance, in Thailand bonding and in Vietnam bridginglink social capital has a positive effect on loan repayment.

► Social capital (SC) equals personal network ties plus resources.
► We examine the effects of social capital on loan repayment behaviour.
► We distinguish four SC variables by tie strength and social distance.
► The effects of social capital vary according to socio-cultural context.
► In Thailand bonding, in Vietnam bridginglink SC has a positive effect on repayment.