CHAPTER VI IMPACT OF SHG MEMBERS-

CORE ISSUE vs. PERIPHERAL ISSUES

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Chapter VI Impact of SHG Members- Core Issue vs. Peripheral Issues

6.1 Introduction

There are about three billion people i.e. half of the world’s population living on the income of

less than two dollars a day. Among these poor communities, one child in five does not live to

see his or her fifth birthday (Barr, 2005). One study in 2006 showed that the ratio of the

income between the 5% richest and 5% poorest of the population is 74 to 1 as compared to

the ratio in 1960, which was 30 to 12[1;2]. According to the World Bank new provisional

estimates, the proportion of people in developing world living on less than $1.25 a day was

20.6% in 2010 down from 43.1% in 1990 and 52.2% in 1981(World Bank, 2012). Globally,

1.25 million in 2010 as against 1.908 million in 1990 were living on less than $1.25 a day.

The international line of $1.25 a day is the average of the national poverty lines in the poorest

10-20 countries (World Bank, 2012).

Micro finance is the form of financial development that has its primary aim to alleviate the

poverty (Barr, 2005; Khan and Rahaman, 2007; Idowu and Salami, 2011). It has emerged in

1970s as social innovators began to offer financial services to the working poor those who

were previously considered ‘unbankable’ because of their lack of collateral (Das, 2012; Das

& Bhowal, 2014b). Micro Finance Institutions (MFIs) are now innovating to empowering

the world’s poor to improve their own lives. In the globe, such programmes are becoming

increasingly popular. The unique innovation of credit delivery technique to enhance income-

generating activities is the micro credit programme that is a collateral-free group-based

lending strategy (World Bank, 1994; Hulme and Mosley, 1996; Yunus, 1999;

Maheswaranathan & Kennedy, 2010). The programme extends small loan to poor people for

self-employment activities, thus, allowing the clients to achieve a better quality of life (e.g.

Rahman, 1995; Hussain, 1998; Morduch, 2000). The success of micro credit has captured the

interest of many researchers in broad areas such as women’s empowerment (Gatz, 1995;

Schuler and Hashemi, 1996), sustainability and outreach (Zeller and Sharma, 1997;

Khandker, 1998), and poverty alleviation including group based lending (Stiglits, 1990;

Varian, 1990). It is the most sensational anti-poverty tool for the poorest, especially for

[1] Khan, Mohammad Arifujjaman and Rahaman, Mohammed Anisur (2007). Impact of Microfinance on Living Standards, Empowerment and Poverty Alleviation of Poor People: A Case Study on Microfinance in the Chittagong District of Bangladesh. Master’s Thesis of Umea School of Business (USBE), Department of Business Administration. Retrieved from http://umu.diva-portal.org/smash/get/diva2:141240/FULLTEXT01.pdf. [Accessed on 21/05/2013] [2] Microfinance/Facts and Figures. Retrieved from http://www.planetfinance.org. [Accessed on 22/06/2011]

http://umu.diva-portal.org/smash/get/diva2:141240/FULLTEXT01.pdf.http://www.planetfinance.org.

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women (Micro Credit Summit, 1997) and has been quite well-recognised that it smoothens

consumption, reduces the vulnerability of the poor and further leads to increase in their

income (Maheswaranathan & Kennedy, 2010). It is reported that by giving the world’s poor a

hands up, micro finance can help to break the vicious cycle of poverty in as little as a single

generation (Maheswaranathan & Kennedy, 2010). Further, SHGs could be used as an

effective mechanism for technology dissemination to support the public extension system;

social and mutual learning; institutionalised process of empowerment; and sustainable,

equitable and participatory extension and development (Meena and Singh, 2012). Thus, it is

believed that they will lead to poverty reduction and empowerment of women.

In the recognition of micro finance, United Nations Organisation (UNO) celebrated the year

2005 as a year of micro credit, as a result this financing instrument is perceived worldwide as

a very effective means against hunger and poverty, mainly in developing countries (Mia,

2005). Governments, donors and NGOs around the world responded enthusiastically with

plans and promised to work together towards the realisation of the UNO announced the

Millennium Development Goals (MDGs) which aimed to eradicate poverty by 2015 (Das &

Bhowal, 2013g). Micro-credit is seen as key policy in meeting the MDGs of many countries

and to build a global economy that addresses the demands of the most vulnerable sections in

the society (Simanowitz and Brody, 2004; Otero, 1999; Littlefield & Rosenberg, 2004;

Friedman, 2006). Afrane (2002) also argued that the quality of living standards of

beneficiaries has been improved due to micro finance intervention. A portfolio report

(2008[3]) on Micro finance and Small Loans Centre (MASLOC) in Ghana indicated that

majority (about 80-95%) of the beneficiaries have seen tremendous improvement in their

livelihood, their businesses and social lives. However, researchers (like Hulme & Mosley,

1996; Morduch, 2000; Weiss and Montgomery, 2005; Bateman, 2007) have contrary views

and this might be as a result of corruption and mismanagement associated with many micro

credit schemes.

It is evidenced from many studies as reported in earlier chapters (Chapter I and II) that micro

finance programme have a positive impact on both economic and social empowerment on the

women members along with reduction in poverty. The relevance of Self Help Groups (SHG)

[3] Microfinance and Small Loans Centre (MASLOC) is a body responsible for implementing the Government of Ghana’s microfinance programmes targeted at reducing poverty, creating jobs and wealth. MASLOC Portfolio Report (2008). Wa, Ghana. Retrieved from http://www.masloc.gov.gh. [Accessed on 17/3/2010].

http://www.masloc.gov.gh.

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as powerful instrument of social, political and economic empowerment of women has also

been unanimously accepted in many studies (e.g. Antia and Kadekodi, 2002; Sinha and

Sinha, 2002; Morduch, 2002 and Jahan et al., 2004). Self help groups (SHGs) and other types

of community-based organisations have been increasingly regarded as important instruments

of development policy (World Bank, 2002; Bardhan, 2002; Chen, Jhabwala, Kanbur and

Richards, 2006). In fact, micro finance has created considerable thrust and expectations

among the academics, policy makers of the Government, NGO leaders, donors, investors and

other development practitioners in all over the world. In essence, micro finance has produced

positive impacts on three vital areas of national development i.e. alleviation of poverty, social

development and women’s empowerment. Regardless of their scale, outreach, location and

the type of clients, all micro finance programme interventions share the common goal of

human development, specifically the economic and social uplifting of those for whom the

programme is targeted. From this underlying objective there are a diverse range of secondary

or intermediate outcomes with powerful and far-reaching effects. Researchers have come up

with an array of terms that reflect this diversity in the resulting impact: ‘wider impacts’ or

‘externalities’ (Khalily, 2004; Zohir and Matin, 2004), ‘spill-over impacts’ (Khandker, 1998)

and ‘intermediaries’ (Hulme, 2000). Irrespective of the varying terminology used to depict

such secondary outcomes, the fundamental rationale and purposes remain identical.

6.2 Impact Assessment Indicators of Micro finance under SHGs Perspectives

A common definition that has emerged is that “impact assessment is a systematic analysis of

the lasting changes-positive or negative, intended or not in people’s lives brought about by

an action or a series of actions” (Roche, 1999). An almost infinite number of variables can

be identified to assess impact on different units. To be of use these must be able to be defined

with precision and must be measurable.

The term Impact Assessment is being substituted for evaluation with a greater focus on the

outcomes of interventions, rather than inputs and outputs (Hulme, 2000). Impact assessment,

also called impact evaluation measures the difference in outcomes with the programme

compared to outcomes without the programme, and therefore tells us whether the programme

worked or not. Implicitly, Impact Assessment is a method by which stakeholders search for

more information about Micro Finance Institutions/ micro-finance programme effectiveness

than is the one available from the routine accountability systems. Impact Assessment is also

of significance to subsidised MFIs in terms of meeting the eternally increasing accountability

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demands of their governments (Nanayakkara, 2012). According to Hulme (2000), the

conceptual framework of Impact Assessment has three main elements: viz. (a) model of the

impact chain that the study is to examine; (b) the specification of the unit(s), or levels, at

which impacts are assessed; and (c) the specification of the types of impact that are to be

assessed.

Impact evaluation itself is not new- use of ‘social experiments’ and trials of economic policy

interventions dates back at least to the 1960s in the USA, while impact studies have been

conducted in developing nations in the areas of nutrition, water supply and sanitation and

agriculture since the 1970s. However, impact evaluation across the social sectors, including

areas where impact evaluation was not thought possible even 10 years ago, like education,

infrastructure, governance and micro-credit (Banerjee and Duflo, 2012).

Impact can be studied at different levels viz. individual, enterprise, household, community

and institutional levels. It is reported that international practice in micro finance is moving in

the direction of the development of a set of cost-effective tool of impact assessment using

surveys, qualitative and participatory methods with a view to triangulate impact findings

through these multiple approaches (AIMS, 2000) (Appendix 10). A large number of MFIs at

present are using a combination of AIMS (Assessing the Impact of Microenterprise Services

Project) tools to assess impact in the different arenas of micro finance which includes: (i)

impact survey; (ii) client exit survey; (iii) loan use strategies; (iv) client satisfaction; and (v)

client empowerment (Tankha, 2002). However, further research continues, among others, to

devise tools for assessing impact on the poorest clients and gender relations. Further, it also

needs to be examined whether these tools are appropriate for assessing the effectiveness of

community finance organisations based on SHGs instead of client-based micro finance

programmes (Tankha, 2002).

During the 1990s many scholars (like Sebstad et al.,1995; Gaile & Foster, 1996; Hulme,

1997; Mosley, 1997) devoted their efforts in identifying and developing appropriate methods

of the impact assessment. Given the development of the impact assessment methodologies, a

number of impact assessment studies were conducted in the late 1990s and early 2000s (viz.

Mosley, 2001; Manroth, 2001; Mayoux, 2001; Afrane, 2002). Focusing on the measurement

indicators and the extent of the transformations in their lives and business of the project

beneficiaries, these impact assessment studies attempted to provide the effects of the micro

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finance programme interventions. The approaches and the methods of micro finance impact

assessment are diverse (Khalily, 2004). They vary from the descriptive to the econometric

analysis and from limited use to extensive use of econometric techniques. The choice of the

methods to use for the impact assessment depends on whether the methods can establish the

existing relationship between the changes that occur on different activities and participations

in micro finance programmes (Kessy, 2013).

Indeed, for MFIs impact assessment is important in enabling them to remain true to their

mission of “working with poor people in their struggle against hunger, disease, exploitation

and poverty” (Johnson & Rogaly, 1997). In the words of Afrane (2002) “impact assessment

as a management process has been mainly associated with and driven by donor agencies. It

is increasingly acknowledged, however, that donor interventions have higher potential of

sustainability and growth if these processes are developed and managed with greater

involvement of the target group. The traditional approach to impact assessment comprises

reviews and examinations of effects by ‘neutral’ outsiders who are more likely to give

unbiased and uninfluenced assessment. This method is criticised as being monolithic in form

and basically extractive in process, and it fails to identify and respond to changing needs and

impacts of projects.” In a positivist view, this approach is supposed to be scientific, based on

standardised means of quantifying outcomes, reliability, and validity of data (Golafshani,

2003).

The objectives of micro finance impact assessment are ranged across a continuum

represented by the two poles of ‘proving impact’ and ‘improving practice’ (Hulme, 2000; Sa-

Dhan, 2003; Maredia, 2009). The former represents objectivity, accuracy and analytical

rigour and is the major concern of donors, academics and policy makers. The latter is more

subjective, process-related and directed at internal learning of practitioners and donor field

staff (Hulme, 2000; Sa-Dhan, 2003). Correspondingly, in terms of the methodologies in

impact assessment there is a conflict between survey-based quantitative studies on the one

hand and qualitative approaches such as case studies and a range of participatory techniques

(Sa-Dhan, 2003). Duvendack et al. (2011) while presenting systematic review found that

almost all impact evaluations of micro finance suffer from weak methodologies and

inadequate data (also expressed by Adams and Von Pischke, 1992), thus the reliability of

impact estimates are adversely affected. This can lead to misconceptions about the actual

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effects of a micro finance programme, thereby diverting attention from the search for perhaps

more pro-poor interventions.

Conventionally, economic indicators have dominated micro finance impact assessments with

assessors particularly keen to measure changes in income despite the enormous problems

(Hulme, 1998). Other popular variables have been levels and patterns of expenditure,

improvement in standard of living, consumption, savings, literacy and assets.

6.2.1 Social Impact Assessment Indicators of Micro finance under SHGs

Perspective

As the ‘social’ sphere of impact is the focal point of this research, it is pertinent to have a

very clear understanding of how the term is perceived in development research and academic

circles and how it will be connoted in this study. Neubert (2000) describes it as “concerning

the order of human society”, by referring to it as a concept that pertains to the relationship

between individuals, between individuals and groups and between groups within a society.

Taking a more generalised sense, the World Bank underscores the element of human welfare

that stands out clearly in the description it puts forth: “social dimension refers to the welfare

of human beings, i.e. their quality of life, their education and the quality, permanence and

sustainability of their institutions and relationships” (World Bank, 1997).

The Inter-organisational Committee on Guidelines and Principles for Social Assessment

(1994, cited in Glasson, 2000) presents an all-encompassing description of Social Impact

Assessment (SIA) and suggests that cultural impacts also constitute an important element

while assessing social impacts. According to this committee, ‘social impacts’ mean the

“consequences to human populations of any public or private actions, that alter the ways in

which people live, work, play, relate to one another, organise to meet their needs and

generally cope as members of society. The term also includes cultural impacts involving

changes to the norms, values and beliefs that guide and rationalise their cognition of

themselves and their society.”

The International Association for Impact Assessment (IAIA), an independent- not-for-profit

organisation that researches on Impact Assessment issues suggests that the primary

constituents to look out in any Social Impact Assessment study are the sustainability and the

equitability that ensue due to any form of programme intervention. ‘Social impact

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assessment’, according to the association, “includes the processes of analysing, monitoring

and managing the intended and unintended social consequences, both positive and negative,

of planned interventions (policies, programmes, plans, and projects) and any social change

processes invoked by those interventions. Its primary purpose is to bring about a more

sustainable and equitable bio-physical and human environment” (IAIA, 2003).

Variables of social impact refers to measurable changes to the human population,

communities and social relationships resulting from development initiatives instigated by

third sector organisations like NGOs or MFIs (Ghalib, 2009). Broadly speaking, these

variables pertain predominantly to indicators proposed by various institutions in an attempt to

set forth a standardised and measurable set of indices that determine human well-being in a

society. Owing to the intricacy of human behaviour and complexity of elements such as

socio-political and socio-economic factors that come into play, it becomes extremely

complicated to come up with such a set of variables and indicators that are universally

acceptable, applicable and appropriate (Ghalib, 2009). Measuring ‘social inclusion’ is

challenging, both in terms of assessing impacts from social inclusion policies, as well as in

obtaining accurate assessment of inclusivity (Waddington, 2013).

Social impact by means of micro financing activities and its evaluation can be best

understood by means of a standard model. However, there are no well acceptable models so

far developed to access social impact (Ghalib, 2009). The Annual Human Development

Report (HDR, 2006) published by the United Nations Development Programme (UNDP)

makes use of a number of such indicators that attempt to portray, amongst other aspects, the

social well-being of people around the world (Human Development Report, 2006) viz.

Human Development Index (HDI), Gender-related Development Index (GDI), Gender

Empowerment Measure (GEM), Quality of Life Index (QLI), Economist Intelligence Unit

(EIU) etc. In 2003, foundation Argidus [4], CERISE (2000[5]) and several European

researchers had developed the initiative of Social Performance Indicators (Jose & Joao,

[4] Argidius Foundation founded in 1966, which provides financial, operational, and strategic support to key partners in order to support promising entrepreneurs and SMEs. The Foundation’s support was initially targeted towards Latin America but has expanded into Africa in more recent years. [5] CERISE (Comité d'Echanges de Réflexion et d'Information sur les Systèmes d' Epargne-crédit, France) is a knowledge exchange network for microfinance practitioners. Founded in 1998, CERISE is richly diverse, bringing together a variety of practitioners, researchers, donors and investors from the North and South. CERISE was founded out of the desire of its five members to share and learn from each other. They work on four themes, viz. 1) Impact and Social Performance; 2) Agricultural and Rural Finance; 3) Governance and Social Viability; and 4) Intervention Methods. CERISE brings together five leaders in French microfinance with over twenty years of experience providing technical assistance to MFIs around the world: three NGOs (CIDR, GRET and IRAM); a public research institute (CIRAD) and academic institution (IRC).

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2001). It is conceived like an instrument of analysis that can stimulate the internal reflection

on the MFI or between its managers and their stakeholders as for the social objectives and the

realisations and perspectives of the institution. Further, the Consultative Group to Assist the

Poor (CGAP) rates the social performance of MFIs from the main five dimensions of the

Millennium Development Goals: i) Proportion of clients below the line of the poverty; ii)

Improvement of the savings of the clients; iii) Improvement of the presence in the school of

the children and reduction of the illiteracy; iv) Improvement on the access to the services of

health; and v) Progress in terms of women empowerment. Zeller et al. (2005) developed the

Social Performance Indicators (SPI) tool, an internal evaluation of the social performance of

the MFIs in light of four fundamental dimensions with some specific research queries. These

dimensions includes (i) outreach to the poor & excluded , (ii) adaptation of the Services &

Products to the Target Clients, (iii) improvement of social and political capital of the clients

and (iv) social responsibility of the institution.

The social indicators that became popular in the early 1980s (e.g. educational status, access to

health services, nutritional levels, anthropometric measures and contraceptive use etc.) have

recently been extended into the socio-political arena in an attempt to assess whether micro

finance can promote empowerment (e.g. Schuler and Hashemi, 1994; Hashemi et al., 1995;

Goetz and Sen Gupta, 1996; and Mayoux, 1997). This has led to the measurement of

individual control over resources, involvement in household and community decision-

making, levels of participation in community activities and social networks and electoral

participation. The bulk of this work has focused on changes in gender relations, but there are

sometimes partially formulated assessments of class relations within it (Fuglesang et al.,

1993). These extensions to the types of impact assessed permit impact assessments to be

more sophisticated and to shed light on developmental impacts at a time when the goals of

development have also extended.

The Social Impact Measurement Index (SIMI) developed by Ghalib (2009) attempted to

classify and evaluate broad categories that encompass a wide range of such aspects which

affect borrowers in particular and the societies and communities in the broader perspective.

These variables can be considered as vehicles or the channels through which the actual

process of social impact takes place in development-related initiatives. The four variables that

form the basis of the model (alongside their sub-categories) are livelihoods (lifestyle and

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empowerment), literacy (knowledge and awareness), community (social and cultural

interaction) and health (physical and mental well-being).

Thus it is observed that studies on the impact of micro finance on the poor will have to

consider different outcome variables. These could include increased consumption, income

stability and income growth, reduced inequalities, health and education outcomes, nutrition

improvements, employment levels, empowerment indicators, reduced vulnerability to shocks,

strengthened social networks, and strengthened local economic and social development, and

can vary according to who has been reached by these micro finance services (e.g. women, the

poorest etc). Kabeer (2003) refers to such dimensions of impact as cognitive, behavioural,

material, relational and institutional changes. Brau and Woller (2004) and Kabeer (2003)

further highlighted that “impact studies should not only look at individual and/or household-

level impacts, but also look at impacts on community, economy and national levels.” Hulme

(2000) identified three main elements of a conceptual framework of impact assessments viz.

models of impact chains, which reveal the assumptions regarding transmission mechanisms

from intervention to impact; units/levels of assessment, like the individual, household,

community, business, institution; and types of impacts, ranging from economic and social to

political impacts, measured by an array of variables. Prem Chander & Vanguri (2007) has

used some indicators to assess the impact of micro credit schemes, which are oriented

towards empowering rural poor women (viz. saving and credit usage, access to health and

education services, participation in decision-making process, initiation of income generating

activities, ownership of assets, convergence of schemes and programmes, capacity building

and mobility of women). Further, four broad impact indicators or domains were defined for

both SAT (Sinapi Aba Trust [6]) and Soweto Microenterprise Development (SOMED [7])

studies such as economic domains, access to life-enhancing facilities, and social and spiritual

domains. Specific indicators were developed for each domain. The first segment of

assessment focused on quantitative indicators while the second segment deals with qualitative

indicators as presented in Appendix 9. It is clear from the above analysis and survey of

literature as reported in the earlier chapter 2 that the state of impact assessment in micro

[6] Sinapi Aba Trust (SAT), a not-for-profit microfinance organisation in Ghana has evolved its business to begin operations in the first tier as a non-bank financial institution. The SAT has been supporting the economically active poor to enhance their lives through micro finance and basic business training. Retrieved from http://www.sinapiaba.com. [Accessed on 17/3/2010]. [7] Soweto Microenterprise Development (SOMED) project-a micro finance programme initiated in 1994 to provide credit and training to small and micro enterprises in South West Townships (Soweto) of Johannesburg in South Africa. The programme involved the provision of institutional development and lending capital for a micro-enterprise.

http://www.sinapiaba.com.

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finance, more specifically community organisations such as SHGs is still undeveloped in

India because of dearth of major impact assessment studies confined to Indian context.

6.3 Micro Financing through SHG: Its impact

An impressive literature exists on the effectiveness of micro credit or micro financing

programmes on improving the economic situation of women (e.g. Fernando, 1997; Mayoux,

1999; Ahmed et al., 2001; Amin et al., 2001; Pitt et al., 2003; Izugbara, 2004). An evaluation

study on Centre for Agriculture and Rural Development (CARD [8]) of Philippines suggest

that micro finance has succeeded in reaching very low-income households, generating self-

employment and significantly increasing their income [9]. In Poverty Reduction Strategy of

Pakistan (2010) micro credit is indicated as an important tool for creating employment

opportunities for poor. While impact study of KASHF foundation of Pakistan (2010[10])

revealed that 94% of its borrowers have experienced positive economic and social changes in

their households and 75% of them feel that without this loan it would have not been possible

for them to undertake business activities and to generate employment and income[11].

Research conducted by the Consultative Group for the Poor in Indonesia [12] found that micro

credit borrowers increased their incomes by 12.9% compared to 3.0% by the income of non-

clients [13]. A study of Society for Helping Awakening Rural Poor through Education

(SHARE [14]) of India reported that 85% of its clients constituted the bottom 20% of the

individuals living below the poverty line. In Bolivia, it was reported that the incomes of

CRECER clients [15] increased by two-thirds after joining the programme (Gibbons &

Meehan, 2000).

[8] The Center for Agricultural and Rural Development (CARD) is a public policy research center for agricultural economics at Iowa State University. Philippines. Retrieved from http://www.card.iastate.edu/publications. [Accessed on 21/02/2010]. [9] The State of Pakistan’s Economy, Special Section 2: Role of Microcredit in Poverty Alleviation, First Quarterly Report for FY05. Retrieved from http://www.sbp.org.pk/reports/quarterly/FY05/first/Special_2.pdf. [Accessed on 1/02/2013]. [10] Kashf Foundation is Pakistan’s premier wealth management company for low income households which was created with the aim to alleviate poverty by providing a suite of high quality affordable financial and non-financial services to low income households, especially women, in order to build their capacity and enhance their economic role. Retrieved from http://kashf.org. [Accessed on 21/02/2010]. [11] The State of Pakistan’s Economy, Special Section 2: Role of Microcredit in Poverty Alleviation, First Quarterly Report for FY05. Retrieved from http://www.sbp.org.pk/reports/quarterly/FY05/first/Special_2.pdf. [Accessed on 1/02/2013]. [12] CGAP is an independent policy and research center dedicated to advancing financial access for the world’s poor. Cited in Mondal, Wali I. (2009). Poverty Alleviation and Microcredit in Sub-Saharan Africa. International Business & Economics Research Journal, January, 8(1), 1-10. Retrieved from http://cluteonline.com/journals/index.php/IBER/article/download/.../3130. [Accessed on 7/08/2010]. [13] The State of Pakistan’s Economy, Special Section 2: Role of Microcredit in Poverty Alleviation, First Quarterly Report for FY05. Retrieved from http://www.sbp.org.pk/reports/quarterly/FY05/first/Special_2.pdf. [Accessed on 7/08/2013]. [14] Society for Helping Awakening Rural Poor through Education. Cited in Garson, Jose. Micro finance and Anti-Poverty Strategies. A Donor Perspective. UNCDF. Retrieved from http://www.undp.org/uncdf/pubs/mf/mf-chap1.htm#a. [Accessed on 1/02/2010]. [15] CRECER (Crédito con Educación Rural of Bolivia) is a private non-for-profit organisation which exclusively provides its credit services with education to women, to whom the access to financial and educational services of quality allows them to develop their human potential through self-management activities and projects. CRECER has achieved to unite both,

http://www.card.iastate.edu/publications.http://www.sbp.org.pk/reports/quarterly/FY05/first/Special_2.pdf.http://kashf.org.http://www.sbp.org.pk/reports/quarterly/FY05/first/Special_2.pdf.http://cluteonline.com/journals/index.php/IBER/article/download/.../3130.http://www.sbp.org.pk/reports/quarterly/FY05/first/Special_2.pdf.http://www.undp.org/uncdf/pubs/mf/mf-chap1.htm#a.

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It is evident from several studies that Grameen Bank in Bangladesh, Badan Kredit Kecamatan

(BKK) in Indonesia, Action Comunitaria in Peru, Amnah Ikhtiar Malaysia in Malaysia, Self-

Employment Women’s Association (SEWA) and MYRADA in India are among those who

have successfully served hundreds of thousands of the World’s poor particularly targeting

women (Berg et al., 1988; Fuglesang et al., 1993; Gibbons and Kasim, 1995; Panjaitan et al.,

1999; Shehabuddin, 1992; Wilson, 2002; EDA, 2002). Falaiye (2002) in his study on the

impact of micro credit on rural Nigerian women found that the micro credit has positively

changed the clients’ self-esteem and confidence, leadership abilities and decision-making

process; contributing to their household’s well-being and increasingly seeking out solutions

to their own problems and the community. A lot of researcher also submits that micro credit

intervention scheme is the key and has the potential of alleviating poverty of the rural farmers

in Nigeria (Erie, 2008; Fasoranti, 2010; Alakpa, 2014). Rooyen (2012) while reviewing

impact of micro finance in Sub-Saharan Africa reported that there are positive impacts on

income, savings, expenditure, and the accumulation of assets, as well as non-financial

outcomes including health, nutrition, food security, education, child labour, women’s

empowerment, housing, job creation, and social cohesion. Further, other studies in the

international context (like Doocy et al., 2005; Hamad & Fernald, 2010) also support the

notion that micro credit participation has positive effects on the nutritional status of female

clients. Doocy et al. (2005) who studied on micro finance programmes as means of

improving coping capacity in drought prone Ethiopia reiterates that micro finance

programmes in the country are successful in increasing household coping capacity in chronic

natural disasters, especially when clients are female and indicate that micro finance

programmes may have an important role as a means of enhancing population well-being in

the context of natural disasters and humanitarian emergencies. Other academic researchers

(Falaiye, 2002; Afrane, 2002; Doocy et al., 2004; Chandrashekar, 2009) from some

developing countries also confirm and acknowledge the positive impact of micro finance.

The economic impact of SHGs on members was relatively more pronounced on the social

aspects than the economic aspects (Puhazendhi & Satyasai, 2001). The SHG is really boons

in the rural areas that gives financial autonomy to the rural women and make them

economically independent (Lakshmanan, 2001). Although the loan amount advanced by the

credit and education in such a way that they reinforce each other reciprocally. Retrieved from http://www.mixmarket.org/mfi/crecer. [Accessed on 17/3/2010].

http://www.mixmarket.org/mfi/crecer.

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group is small, it helps in meeting the basic requirement of the poor. Small amounts of loans

coupled with financial discipline ensure that loans are given more frequently and hence credit

needs for a variety of purposes and at shorter time intervals can be met. This is a better

mechanism to reduce poverty gradually as against one time loan for productive asset, which

may or may not lead to sustained increases in income (Madheswaran and Dharmadhikary,

2001). The women have tremendous energies to start their own enterprises given the right

opportunities. They have developed abundant self-confidence and self-esteem through SHG

movement. Not only economic poverty but also social and gender issues can be tackled

effectively through this process (Chiranjeevulu, 2003; Ali et al., 2006; Sinha, 2008; Mansuri,

2010). The micro financing to women through SHGs has helped the groups to achieve a

measure of economic and social empowerment. It is further observed that the SHGs have

become a platform for exchange of experiences and ideas (Tilekar et al., 2001). It has

developed a sense of leadership and promotes organisational skill, ensure management of

various activities of a business i.e. right from acquiring finance, identifying raw material,

market and suitable diversification and modernisation (Manimekali and Rajeswari, 2001).

Hence, micro financing through SHGs is contributing to the development of rural people in a

meaningful manner. It is seen that significant changes in the living standards of SHG

members have taken place in terms of increase in income levels, assets, savings, borrowing

capacity and income generating activities (Sharma, 2001). It has been observed that the

overall impact of micro finance through SHGs is very effective in combating poverty,

unemployment and empowerment of women.

A strong case can be made that assets are particularly a useful indicator of impact because

their level does not fluctuate as greatly as other economic indicators and is not simply based

on an annual estimate (Barnes, 1996; Hulme, 1999; Hulme & Thankom, 2009). On the other

hand, Baruah (2009) observed that one of the methods to study the impact of micro finance

on poverty is by considering the changing income level of the SHG’s members. However, an

increased income level may not be a proper tool to measure the impact of micro finance on

poverty; especially in a society where the labour market is not a well-organised one (Das &

Bhowal, 2013h). Again, the increased income level may not be a permanent one. However,

there should be no confusion that to improve the economic condition of the members SHGs

must provide some income-generating asset to the members. Thus, the impact of SHGs on

poverty of the members can be substituted by the impact of SHGs on the ‘asset creation’ of

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the members. To create asset, the SHG members must use their loan amount for capital

investment.

Several researchers have reported that SHGs contribute in other areas of economic

development and growth such as poverty eradication, social transformation and

empowerment (e.g. Anand, 2002; Chavan and Birajdar, 2009; Nidheesh, 2009; Sujatha, 2011;

and Aruna and Jyothirmayi, 2011). Similarly, Sharma (2001) stated that SHGs are the major

tools for women’s empowerment. Their participation in the economic activities and decision-

making at the household and societal levels are increasing and making the process of rural

development participatory, democratic, sustainable and independent of subsidy. Dasgupta

(2001) observed that micro financing through the informal SHGs approach has effected quite

a few benefits, such as: (i) savings mobilised by the poor; (ii) access to the required amount

of appropriate credit by the poor; (iii) matching the demand and supply of credit structure and

opening new markets for financial institutions; (iv) reduction in transaction cost for both

lenders and borrowers; (v) tremendous improvement in recovery; (vi) heralding a new

realisation of subsidies and corruption less credit, and (vii) remarkable empowerment of poor

women. Several studies (e.g. Puhazhendi and Satyasai, 2000; Puhazhendi and Badatya, 2002;

and EDA Rural System & APMAS, 2006) discussed mainly various socio-economic

parameters of SHG members related to the situation during pre-SHG and post-SHG periods,

on the other hand, some researcher (e.g. Chakrabarti, 2004; Nair, 2005; and Moyle, Dollar

and Biswas, 2006) assessed more specific type of issues such as role of SHG federations in

providing sustainability of SHGs, economic and personal empowerment of women and role

of micro finance in poverty eradication and so on. A collaborative study of NABARD and APMAS (2009) which is based on primary data from

Assam revealed that the SBLP yielded more social and economic benefits to the SHG

members. NCAER (2008) conducted a study to assess the impact of the SBLP on the socio-

economic conditions of individual SHG members by comparing their pre and post SHG

scenarios across six states in five different regions of India. The study concluded that the

SBLP has positive impact on members by increasing their access to financial services (and

reducing household poverty) as well as empowered women through an increase in their self-

confidence. From the literature reviews of empirical research on the impact of micro finance

on the poor found controversial (and inconclusive) findings. Makina and Malobola (2004)

classify such findings into a three-fold typology:

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a) Those studies that find beneficial socio-economic impacts, such as income stability and growth, reduced income inequality, reduced vulnerability, employment,

nutrition and health improvements, school attendance, strengthened social networks,

and women’s empowerment (e.g. Barnes, 1996; Schuler et al., 1997; UNICEF,

1997; Barnes and Keogh, 1999; Wright, 2000; Khandker, 2001; Afrane, 2002; Beck

et al., 2004; Hietalahti and Linden, 2006; and Hossain and Knight, 2008).

b) Those studies that allude to negative impacts, such as the exploitation of women, unchanged poverty levels, increased income inequality, increased workloads, high

interest rates and loan repayment, creating dependencies, and creating barriers to

sustainable local economic and social development (e.g. Adams and Von Pischke,

1992; Goetz and Sen Gupta, 1996; Rogaly, 1996; Buckley, 1997; Kabeer, 1998;

Copestake, 2002; and Bateman and Chang, 2009).

c) Those studies that show mixed impacts which includes benefits for the poor but not for the poorest (e.g. Hulme and Mosley, 1996; Morduch, 1998; Mosley and Hulme,

1998; Copestake et al., 2001; and Zaman, 2001); or helping the poor to better

manage the money they have (Rutherford, 1996) but not directly or sufficiently

increasing income, empowering women, etc. (e.g. Rahman, 1998; Mayoux, 1999;

and Husain et al., 2010). Karnani (2007) argues that money spent on micro finances

could be better used for other interventions, like supporting large labour-intensive

industries for job creation. And there are literature that argues that a single

intervention (like micro finance) is much less effective as an anti-poverty resource

than simultaneous efforts that combine micro-finance, health, education, etc.

(Lipton, 1996).

Furthermore, SEKSF (2006) reviewed sixty-nine studies covering micro finance operations

of NGOs and women’s SHGs from India and reported the following facts:

i) Outreach to the poor: The studies showed that outreach to the ultra poor needs careful targeting, combined with welfare programmes (e.g. Burra and Ranadive,

2005; and Premchander & Prameela, 2007).

ii) Role of women’s own savings: Savings play an important role in meeting the

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financial requirement of women, and when retained with women’s groups also give

them more financial and social capital than credit taken from external sources

(Solution Exchange, 2006).

iii) Positive impacts: Several micro-finance impact studies showed that there is

increase in savings, assets, higher expenditure on food, improvement in nutrition

and education; as well as and positional changes such as increased self-confidence

and improved position within the family and increased participation at the

community level (e.g. AFC, 2005; Burra and Ranadive, 2005; Collective Action for

Social Advancement, 2006; and Premchander and Prameela, 2007).

iv) Negative impacts: Recently, negative impacts of micro finance have also been

documented and analysed in many studies, e.g. borrower suicides, humiliation faced

by micro-finance clients and increased indebtedness (e.g. Shylendra, 2006; and

Rajashekar, 2007).

Therefore, it is clear from the literature that the state of impact assessment in micro finance,

more specifically community organisations such as SHGs is still undeveloped in general and

very nascent stage in India. It is found that almost all impact evaluations of micro finance-

SHGs suffer from weak methodologies and inadequate and thus the reliability of impact

estimates are adversely affected (Duvendack et al., 2011). Studies on the impact of micro

finance on the poor will then have to consider different outcome variables. These could

include increased consumption, income stability and income growth, reduced inequalities,

health and education outcomes, nutrition improvements, employment levels, empowerment

indicators, reduced vulnerability to shocks, strengthened social networks, and strengthened

local economic and social development, and can vary according to who has been reached by

these micro finance services (Stewart et al., 2010; Das & Bhowal, 2013h). Researcher

believed that micro finance through SHGs help members of SHG to reduce their dependence

on moneylenders and increases their confidence levels, self-respect and decision making

power (e.g. Kandekar, 2003; Kandekar, 2005; Singh, 2006; Srinivasan, 2006; Premchander

and Prameela, 2007; Swain and Floro, 2007; Tedeschi, 2008; Banerjee, 2009; and Imai et al.,

2010). A lot of evaluation and empirical studies were conducted so far in India and across the

world to assess the impact of SHGs on members. However, all these studies are to some

extent confined to one or more of the followings facts.

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Income, saving and assets creation: It is reported in many studies that primary

benefits of participation in SHG is the opportunity to save regularly, access formal

savings institutions and participate in the management of these savings (Dasgupta,

2001; Lakshmanan, 2001; Madheswaran and Dharmadhikary, 2001; Sharma, 2001;

Dasgupta, 2001; Puhazhendi and Badatya, 2002; Sarangi, 2007; NCAER, 2008;

Sarswathy et al., 2009; Baruah, 2009; Samanta, 2009; Meetei, 2011; Sahoo, 2011;

Nath Sarmah et al., 2012; and Gajbhiye, 2012). Majority of the impact studies in the

past have measured impact on the basis of change in reported income, since income

increase results in increase in savings and assets over a period of time (UNICEF 1997;

Khandker, 1998; Morduch, 2002; Wright, 2000).

Access to credit: An immediate effect of involvement and participation in SHGs is an

improvement in a woman’s access to credit. According to some of the successful

groups, the financial mobility is due to participation in the SHG and has led to an

improvement in the quality of life. Overall, many families were able to address their

basic needs better than before which is also reported in many studies (Dasgupta, 2001;

Madheswaran and Dharmadhikary, 2001; Sharma, 2001; Puhazhendi and Badatya,

2002; NCAER, 2008; Samanta, 2009).

Employment and setting income generating units: The implementation of SHG has

generated self-employment opportunities by establishing own income-generating

units. The programme helped many participants in improving their economic

conditions (Manimekali and Rajeswari, 2001; Sharma, 2001; Prem Chander &

Prameela, 2007; Yamuna, 2007; Devi et al., 2007; Borbora & Mahanta, 2008; Gladis,

2008; Samanta, 2009).

Economic & non-economic decision-making within the household: It is reported in

many studies that the impact of the SHG programme increased involvement in

household decision-making. Researcher observed that there is a change in the attitude

of male members of the families, especially in children education, schoolings

decisions, sanitation etc. (Manimekalai and Rajeswari, 2001; Kabeer, 2001; Prem

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Chander & Prameela, 2007; Choudhury, 2008; Kumar, 2009; Banerjee, 2009;

Soroushmehr et al., 2012).

Participation in local government: Involvement in SHG has resulted further

involvement in the democratic set up either in the SHG leadership or in participation

in local bodies. These impacts of SHGs are also refereed in many studies (Abdulla,

2000; Manimekalai and Rajeswari, 2001; Cheston & Kuhn, 2002; Khatibi and Indira,

2011; Chitagubbi et al., 2011; Sahu & Singh, 2012; Reddy & Reddy, 2012;

Balachandran & Sekar, 2013).

Communication level of members: Micro-finance movement is having a good

impact on members, in their ability to express their feelings and has made people

more confident to express themselves (Manimekalai and Rajeshwari, 2001; Tilekar et

al., 2001; Krishnaraj and Kay, 2002; Putnam, 2002; Anjugam and Ramasamy, 2007;

Reddy & Reddy, 2012; Gajbhiye, 2012).

Self-confidence among members: It is observed that after joining the SHG, the

members have improved their status in family, skill and feel confident in establishing

economic units. They now feel confident in consultation with government, non-

government and bank officials about their problems. Such interaction helped them to

articulate their problems and improved their self-confidence (Manimekalai and

Rajeshwari, 2001; Tilekar et al., 2001; Cheston & Kuhn, 2002; Chiranjeevulu, 2003;

Krishnaraj and Kay, 2002; Putnam, 2002; Singh, 2006; Moyle, Dollard and Biswas,

2006; Anjugam and Ramasamy, 2007; Prem Chander & Vanguri, 2007; Borbora and

Mahanta, 2008; Chitagubbi et al., 2011; Sahu & Singh, 2012; Reddy & Reddy, 2012;

Soroushmehr et al., 2012; Gajbhiye, 2012; Balachandran & Sekar, 2013).

Change in domestic violence: Involvement with SHG has reduced domestic violence

that was also reported in many research studies (Bokil, 2005; Gaiha & Nandhi, 2007;

Mehta, Mishra & Singh, 2011; Neogi & Dey, 2013).

Status of access to amenities: SHG’s programme has economic as well social

implications. It can be seen that there has been an increase in standard of living in

terms of their status of access to amenities factors. It is reported that after joining the

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SHG the members have improved in getting access to different amenities like

medical, sanitation, education, market, water supply, transport (Manimekali and

Rajeswari, 2001; Kabeer, 2001; Prem Chander & Vanguri, 2007; Yamuna, 2007;

Kumar, 2009; Mehta et al., 2011).

Community participation: SHG members undertook many community activities.

They participated in several social & community development initiatives and other

social welfare programmes. Involvement in such programmes resulted interaction

with experts has resulted in building congenial relationships and has ensured fewer

conflicts. Community participation had the multiplier effect of spreading the SHG

movement. Awareness of health related issues, personal hygiene, communicable

diseases; effects of malnutrition, environmental issues and sanitation have also

increased because of training programmes and their participation in the related

projects. They also organises many community development events which are also

observed by many researcher (Kabeer, 2001; Krishnaraj and Kay, 2002; Putnam,

2002; Singh, 2006; Prem Chander & Vanguri, 2007; Borbora and Mahanta, 2008;

Choudhury, 2008; Kumar, 2009; Gajbhiye, 2012).

Increased nutritional status: Researcher also observed some positive impacts on

nutritional intake of the family members of SHGs (Kabeer, 2001; Kumar, 2009;

Deininger & Liu, 2009).

Social capital: Social capital and SHGs based micro finance programme are central

to mainstream of development. Social capital cultivated through SHGs improves

credit worthiness of women, create support system and involves greater sense of

community, trust, reliance on each other, sharing of information, skill up-gradation,

better decision making and bargaining power within family and community [16].

Ronchi (2004) states that social capital and micro finance are reinforce each other.

One of the main distinguishing characteristics of Self Help Groups is the strong

emphasis on building social cohesion. This enables members to overcome social,

economic, and political differences and establish collective strength to promote their

[16] Dayanandan, R. (undated). Assessment of Social Capital in Women Self Help Groups and its Impact on Members in Hawassa City, Ethiopia. Retrieved from http://essswa.org/Download/ESSSWA%20Ninth%20Annual%20Conference%20Presentations/Assessment%20of%20Social%20Capital%20in%20Women%20Self%20Help%20Groups%20and%20its%20Impact%20on%20Members%20in%20Hawassa%20City%20Co.pdf. [Accessed on 17/3/2013].

http://essswa.org/Download/ESSSWA%20Ninth%20Annual%20Conference%20Presentations/Assessment%20of%20Social

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collective interests (Chen, Jhabwala, Kanbur and Richards, 2006). Development

programmes like micro finance can build social capital to improve the effectiveness of

desired outcome such as social empowerment of women. Social capital can also be

enhanced by increasing social interactivity (Falk & Kilputrick, 1999; Basargekar,

2010). This process requires two resources such as ‘knowledge resources’ or common

understanding of community, group members, collective information, skill sets, etc.

and ‘identity resources’ which build up a sense of belongingness and encourage

participation for bringing out change. Social capital of SHG members with the

indicators like (i) groups & networks, (ii) trust & solidarity, (iii) cooperation &

collective action, (iv) information & communication, (v) social cohesion & inclusion

and (vi) empowerment & political action (Dayanandan [17]).

Disseminating social awareness: Members of SHGs spread social awareness among

people of their locality and villages. They make people aware of their social rights &

responsibilities. Involvement of women in SHGs have positive influence on

achieving lower child mortality, improved maternal health, better nutrition, housing &

health (Kabeer, 2001; Singh, 2006; Prem Chander & Vanguri, 2007; Borbora and

Mahanta, 2008; Kumar, 2009; Das, & Bhowal, 2013h; Das, & Bhowal, 2013g;

Balachandran & Sekar, 2013).

Technology dissemination: SHGs have been recognised as reliable and efficient

mode of technology transfer, but it needs positive attitude of SHG members as a pre-

requisite (Meena et al., 2003, Meena et al., 2008). Training had significant impact on

knowledge level of SHG members (Meena et al., 2006, Singh and Meena, 2012).

SHGs and environmental management: Rio Declaration (1992[18]) stated that

“women have a vital role to play in environmental management and development”

and their full participation is essential in achieving sustainable development. The

Millennium Development Goals recognise the need to promote gender equality and

[17] Dayanandan, R. (undated). Assessment of Social Capital in Women Self Help Groups and its Impact on Members in Hawassa City, SNNPR, ETHIOPIA, Hawassa University. Retrieved from http://essswa.org/Download/ESSSWA%20Ninth%20Annual%20Conference%20Presentations/Assessment%20of%20Social%20Capital%20in%20Women%20Self%20Help%20Groups%20and%20its%20Impact%20on%20Members%20in%20Hawassa%20City%20Co.pdf. [Accessed on 17/3/2013]. [18] The Rio Declaration on Environment and Development, often shortened to Rio Declaration, was a short document produced at the 1992 United Nations “Conference on Environment and Development” (UNCED), informally known as the Earth Summit. The Rio Declaration consisted of 27 principles intended to guide future sustainable development around the worlds.

http://essswa.org/Download/ESSSWA%20Ninth%20Annual%20Conference%20Presentations/Assessment%20of%20Social

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empowerment of women, the need to alleviate poverty and ensure sustainable

environmental management. Involvement of SHG members in development

programmes through SHGs can effectively increase awareness of society to ward

environmental sustainability (Farzaneh and Indira, 2011).

Social mobilisation: “Social mobilisation is an approach and tool that enables

people to organise for collective action, by pooling resources and building solidarity

required to resolved common problems and work towards community advancement”

(UNDP, 2002). It is a process that empowers women and men to organise their own

democratically self-governing groups or community organisations which enable them

to initiate and control their own personal and communal development, as opposed to

mere participation in an initiative designed by the government or an external

origination [19]. SHG used combination of various methods under extension methods

and activities, educational methods and activities, social methods and activities,

motivational methods and activities. Due to the social mobilisation process, SHGs

could make the people to realise their power; build people’s confidence in SHGs;

people realised the importance of formation of SHGs; women started saving

regularly; women solved their problems by themselves; stimulate motivation;

promoting awareness & the women able to participate in the democratic process.

Improving the efficiency of credit system: The SHG helps the vulnerable sections

of the society to meet their credit requirements that cannot be possible through formal

banking system. Further, by providing large-scale micro credit, it reduces the costs of

credit delivery and improves the efficiency of credit system (Gaonkar, 2001; Yamuna,

2007; Borbora & Mahanta, 2008).

Impact of SHGs and SHG-Banking on banks: Evidence from many parts of the

country suggests that the SBLP not only helped the groups and members but also the

banks (Das, L., 2012; Reddy & Malik, 2011). Optimum utilisation of their vast

network of rural branches was noted. It is reported that SHG banking have resulted

profitable to many commercial bank branches especially RRBs, cooperative banks

etc. About one-third of Primary Agricultural Cooperative Societies (PACS) in West

[19] Villi, C. (undated). A Study on the Role of NGOs in Social Mobilizations in the Context of SGSY. National Institute of Rural Development Rajendranagar, Hyderabad. Retrieved from http://www.sird.tn.nic.in/pdf/Social%20Mobilisation%20Research.pdf. [Accessed on 27/3/2013].

http://www.sird.tn.nic.in/pdf/Social%20Mobilisation%20Research.pdf.

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Bengal have turned around viable due to SHG banking. Further, most rural bank

branches in Andhra Pradesh have 50% -75% of their portfolio in SHGs. In one of the

district level bankers meeting, it was cited that 90% of total profit in rural bank

branches is a result of SHG banking (Salomo et al., 2010).

Transforming rural economy: SHG plays a major role in transforming rural

economy. SHGs are new innovation in the field of rural economic development, to

finance the rural people and also to satisfy their credit needs (Nalini et al., 2013;

Bhavya & Umesh, 2011). This in turn will help to transform the rural economy by

way of improving the economic status of each and every individual member of the

SHG in the rural areas apart from providing scope for women empowerment (Nalini,

2013).

Impact of SHGs and SHG-Banking on other stakeholders: SHG banking has a

profound impact on many secondary stakeholders. According to NABARD Status of

Microfinance in India (2009), “the SHG-Bank Linkage Programme has transformed

the whole range of institutions-government, banks, NGOs and development

institutions, in their approach towards the development of the poor’’ (Salomo et al.,

2010).

Providing channels to financial inclusion: Financial inclusion aims at providing

easy credit at affordable costs to the vulnerable sections of the society. SHGs are an

important tool in financial inclusion. Moreover, through SHGs funds are provided

mostly to socially and economically backward people like BPL, SC, ST and rural

women (Gaonkar, 2001; Srinivasan and Sriram, 2006; Sinha, 2008; Sangwan, 2008;

Karmakar, 2009; Srinivasan, 2009; Shetty and Veerashekharappa, 2009).

Helps in resource mobilisation: SHGs plays a crucial role in mobilising the savings

of the poor (Manimekalai and Rajeshwari, 2001; Yamuna, 2007; Sinha, 2008; Barman

et al., 2009).

Promoting savings & banking habits: A large number of poor & rural populations

do not have access to banks. SHG motivate their members to save by explaining the

benefits derived from such savings. These savings are pooled together and the funds

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so created are deposited in the banks. Such mandatory savings promote the habits of

thrift among the members (Manimekalai and Rajeshwari; 2001; Yamuna, 2007;

Borbora and Mahanta, 2008; Barman et al., 2009).

Improving living conditions: One of the main aims of SHGs is reduction of poverty

in rural areas. The provision of micro credit leads to self-employment in the rural

areas and helps in reduction of poverty. This improves the living conditions of the

people. Moreover, membership in SHGs enabling poor households to achieve better

school attendance and lower dropout rates of their kids (Manimekalai and Rajeshwari,

2001; Afrane, 2002; Kabeer & Noponen, 2005; Prem Chander & Vanguri, 2007; Nath

Sarmah et al., 2012).

Developing individual skills of group members: The rural people are not well

educated and skilled. While working as members of SHGs, they develop various skills

and acquire knowledge on various subjects like record keeping, credibility, effective

problem solving, team work & leadership (Manimekalai and Rajeshwari, 2001;

Purushotham, 2004; Singh, 2006; Devi et al., 2007; Gajbhiye, 2012; Manhas &

Tiwari, 2012; Balachandran & Sekar, 2013).

Reducing influences of unorganised sectors: SHGs provide bank-supported credit

to its members. This reduces the influences of the unorganised sector of money

market who charge exorbitant rate of interest, on the credit provided to the people

(Gaonkar, 2001; Barman et al., 2009).

6.4 Operationalising the Concepts on Impact of SHG on Members- Core Issue vs.

Peripheral Issues Here in this research study the words ‘core components’ refers as the heart or inner part of

social impact facilitated by the SHG members. It is considered as the central part of issues of

social impact that often enjoyed by SHGs. On the other hand, ‘Peripheral Component’ means

on the outer part of something. Since the study access the perceptions of the direct

stakeholders of SHGs regarding the issue whether impact on members of SHGs and its

involvement in large social issues is Core or Peripheral components of quality indicators or

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not, hence all social impact issues (discussed in the earlier sections) that may impact the SHG

members are incorporated in the research study.

It is already stated that four broad impact indicators or domains that were defined by SAT

(Sinapi Aba Trust) and Soweto Microenterprise Development/SOMED (Affrane, 1998)

project studies (Afrane, 2002), namely economic domains, access to life-enhancing facilities,

and social and spiritual domains. The specific indicators for each of the domain were also

developed and were classified them into quantitative and qualitative indicators (Appendix 9).

These indicators are duly considered in the present study. Further, review of literature are

also conducted to chalk out the indicators to be considered for the study on the impact of

SHG on both social and economic sphere (e.g. Kabeer, 2003; Brau and Woller, 2004; Moyle,

Dollard and Biswas, 2006; Prem Chander & Vanguri, 2007; APMAS, 2009; Salomo et al.,

2010; De and Sarker, 2010; Dhanya and Sivakumar, 2010; Kashyap and Kashyap, 2010;

Kumar, 2010; and Aruna and Jyothirmayi, 2011).

From the survey of literature cited above and in the earlier chapter 2, sixty five statements on

impacts-indicators relating to social issues are identified and included in the study to access

the perceptions of different stakeholders on SHG whether the aspects like impact on members

of SHG and its involvement in larger social issues should be core or peripheral components

of quality indicators of SHG. The instrument, which intended to identify impact on members

of SHG and its involvement in larger social issues should be core or peripheral components

of quality indicators of SHG is the ‘Scale for identifying impact on members &

involvement in social issues as Core or Peripheral component of Quality Parameters of

SHGs’. This tool consisted of 65 items referring to 9 different subscales, such as: (a)

Economic Impact with 9 elements; (b) Participatory with 5 elements; (c) Empowerment with

17 elements; (d) Skill Development with 4 elements); (e) Access to Social Services with 3

elements; (g) Psychological with 7 elements; (h) Community Development with 4 elements;

and (i) Capacity Building with 9 elements. Statements relating to impact on members of

SHGs and involvement in other social issues as stated in chart No. 6.1 and assessment

parameters are denoted as IMPC 1, IMPC 2 and so on as stated in Table No. 6.1.

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Table No. 6. 1 Subscales for assessing Impact of SHG Members- Core Issue vs. Peripheral Issues

Code Impact

Indicators Statement relating to Impact of SHGs on Members’

PS 1 IMPC 1 Improvements in courage EM 1 IMPC 2 Adoption of family planning measures EM 3 IMPC 3 Reduction of domestic violence SO 1 IMPC 4 Negative attitude towards dowry and other social evils SO 2 IMPC 5 Improvement in the literacy level SO 3 IMPC 6 Awareness on children education AS 1 IMPC 7 Awareness on health and sanitation PS 2 IMPC 8 Awareness on food and nutrition PS 3 IMPC 9 Confidences to talk within family by women PS 4 IMPC 10 Enhancement of happiness and peace in the family EM 2 IMPC 11 Enhancement of women’s economic and social empowerment EC 1 IMPC 12 Reduction in poverty through SHG SD 1 IMPC 13 Improvement in technical & practical skills through training. EC 2 IMPC 14 Enhancement of employment opportunities in rural areas EC 3 IMPC 15 Enhancement of creation of assets in rural areas CB 1 IMPC 16 Enhancement of managerial abilities of women SD 2 IMPC 17 Enhancement of use of skills for income generation CB 2 IMPC 18 Orientation for groups management CB 4 IMPC 19 Enhancement of sustainability and cohesiveness of the groups SD 3 IMPC 20 Enhancement of awareness about trainings organized by NGO CB 5 IMPC 21 Enhancement of setting micro enterprises/income generating activity PA 1 IMPC 22 Enhancement of participation in democratic institutions EM 4 IMPC 23 Expressing opinions freely EC 4 IMPC 24 Increases the capacity to spend more EC 5 IMPC 25 Increases the value of asset EC 6 IMPC 26 Increases the income EC 7 IMPC 27 Increases the saving EM 5 IMPC 28 Enhancement of control of use of credit AS 3 IMPC 29 Enhancement of social responsibility drives SD 4 IMPC 30 Improvement in technical and practical skills through training EM 6 IMPC 31 Increase in power of decision making EM 7 IMPC 32 Enhancement of ability to take risk and uncertainties EM 8 IMPC 33 Enhancement of knowledge about Banking and other Govt. operation EM 9 IMPC 34 Enhancement of legal and political awareness PS 5 IMPC 35 Creating awareness about self reliance PS 6 IMPC 36 Enhancement of societal status CD 1 IMPC 37 Enhancement of creating awareness about cleanliness of surrounding of

environment EM 10 IMPC 38 Improving communication skill PA 2 IMPC 39 Inducing participation in politics PA 3 IMPC 40 Induce to contest election CB 6 IMPC 41 Enhancement of ability to try new ventures CB 7 IMPC 42 Enhancement of inducing to assume leadership on issues and skills CB 8 IMPC 43 Ability to transform institutions EM 11 IMPC 44 Enhancement of ability to fight injustice EM 12 IMPC 45 Enhancement of ability to organize struggle SO 6 IMPC 46 Enhancement of girls’ attendance at school CD 2 IMPC 47 Enhancement of women’s contribution to village sanitation EC 8 IMPC 48 Enhancement of women’s financial contribution to household PA 5 IMPC 49 Enhancement of women’s involvement in all household decisions EM 13 IMPC 50 Enhancement of strengthened ties among women PS 7 IMPC 51 Enhancement of improved relationships with husbands EM 14 IMPC 52 Enhancement of women’s improved status in household and community SO 5 IMPC 53 Enhancement of men’s positive change in behaviour and attitude SO 7 IMPC 54 Enhancement of action to bring gender equality

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Code Impact Indicators

Statement relating to Impact of SHGs on Members’

PA 4 IMPC 55 Enhancement of ability to understand & solve problems SO 4 IMPC 56 Reduction in children’s school dropouts AS 2 IMPC 57 Enhancement of help government in immunization programmes CB 9 IMPC 58 Enhancement of promotion of new and another SHG and is guiding it CB 3 IMPC 59 Enhancement of lobbying with administrative authorities for

amenities/problem solving EM 15 IMPC 60 Enhancement of campaign against social evils CD 3 IMPC 61 Enhancement of water supply within the residential locality CD 4 IMPC 62 Enhancement of medical facility for livestock within locality EC 9 IMPC 63 Enhancement of ability to control resources EM 16 IMPC 64 Enhancement of ability to interact effectively in public sphere EM 17 IMPC 65 Enhancement of ability to participate in non-family group

Source: Designed based on Survey of Literature

Chart No. 6. 1

Subscales for assessing Impact of SHG on Members- Core Issue vs. Peripheral Issues

Impact on Members of

SHG

Econ

omic

(EC)

Parti

cipat

ory

(PA)

Empo

werm

ent

(EM)

Skill

Deve

lopme

nt

(SD)

Acce

ss to

So

cial S

ervic

es(A

S )

Soci

al (SO

)

Psyc

holog

ical

(PS)

Comm

unity

De

velop

ment

(C

D)

9 5 17 4 3 7 7 9Ca

pacit

y Bu

ilding

(CB)

4IMPC 12IMPC 14IMPC 15IMPC 24IMPC 25IMPC 26IMPC 27IMPC 48IMPC 63

IMPC 22IMPC 39IMPC 40IMPC 55IMPC 49

IMPC 2 IMPC 38IMPC 11 IMPC 44IMPC 3 IMPC 45IMPC 23 IMPC 50IMPC 28 IMPC 52IMPC 31 IMPC 60IMPC 32 IMPC 64IMPC 33 IMPC 65IMPC 34

IMPC 13IMPC 17IMPC 20IMPC 30

IMPC 7IMPC 57IMPC 29

IMPC 4IMPC 5IMPC 6IMPC 56IMPC 53IMPC 46IMPC 54

IMPC 1IMPC 8IMPC 9IMPC 10IMPC 35IMPC 36IMPC 51

IMPC 37IMPC 47IMPC 61IMPC 62

IMPC 16IMPC 18IMPC 59IMPC 19IMPC 21IMPC 41IMPC 42IMPC 43IMPC 58

Source: Designed based on Survey of Literature

6.5 Stakeholders Perceptions on Impact of SHGs

The perceptions of different stakeholders of SHGs are analysed under the following counts:

6.5.1 Instrument to Measure Impact of SHG: Core or Peripheral Component

The instrument, which intended to identify impact on members of SHG and its involvement

in larger social issues should be core or peripheral components of quality indicators of SHG

is the ‘Scale for identifying impact on members & involvement in social issues as Core

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or Peripheral component of Quality Parameters of SHGs’ (Das & Bhowal, 2014b;

2013g; 2013h; and Das & Chanu, 2014b). This tool consisted of 65 items referring to 9

different quality subscales such as: (a) Economic Impact with 9 elements (IMPC 12, IMPC

14, IMPC 15, IMPC 24, IMPC 25, IMPC 26, IMPC 27, IMPC 48, and IMPC 63); (b)

Participatory with 5 elements (IMPC 22, IMPC 39, IMPC 40, IMPC 49 and IMPC 55); (c)

Empowerment with 17 elements (IMPC 2, IMPC 11, IMPC 3, IMPC 23, IMPC 28, IMPC 31,

IMPC 32, IMPC 33, IMPC 34, IMPC 38, IMPC 44, IMPC 45, IMPC 50, IMPC 52, IMPC 60,

IMPC 64 and IMPC 65); (d) Skill Development with 4 elements (IMPC 13, IMPC 17, IMPC

20 and IMPC 30); (e) Access to Social Services with 3 elements (IMPC 7, IMPC 57 and

IMPC 29); (f) Social with 7 elements (IMPC 4, IMPC 5, IMPC 6, IMPC 56, IMPC 53,

IMPC 46 and IMPC 54); (g) Psychological with 7 elements (IMPC 1, IMPC 8, IMPC 9,

IMPC 10, IMPC 35, IMPC 36 and IMPC 51); (h) Community Development with 4 elements

(IMPC 37, IMPC 47, IMPC 61 and IMPC 62), and (i) Capacity Building with 9 elements

(IMPC 16, IMPC 18, IMPC 59, IMPC 19, IMPC 21, IMPC 41, IMPC 42, IMPC 43, and

IMPC 58). Perceptions of different stakeholders are assessed on each items of the instrument

by using 5-point scale that ranged from (-2) Strongly Disagree to (2) Strongly Agree.

6.5.2 Reliability of the Scale to Measure Impact of SHG: Core or Peripheral

Component Details about the reliability of the instrument to measure impact on members of SHG and its

involvement in larger social issues should be core or peripheral components of quality

indicators of SHG are discussed in section 2.9.11 (a) of Chapter 2. Below Table No. 6.2

shows the value of the coefficient α of Cronbach for the research scale is 0.802 = 80.2% and

it is considered as an extra good value for the internal consequence of the conceptual

construction of the investigated scale (Anastasiadou, 2010; Nouris, 2006). If the researcher

continue with the release of units, in other words with the standardised value of the variables,

then the coefficient Cronbach α will slightly increase the value of α = 0.815. This means that

whether researcher increase the number of the items, then Cronbach α will take the value of

0.815. Table No. 6. 2

Reliability statistics on overall score on Impact of SHG on Members

Cronbach’s Alpha Cronbach’s Alpha Based on Standardized Items Decision

.802 .815 Good

Source: Compiled from the Questionnaire

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348

Further, the descriptive scale statistics in estimating Cronbach’s Alpha on the perception of

different stakeholders on impact on members of SHG denotes the mean value of 22.95,

variance of 171.717 and Standard Deviation of 13.104 (Table No. 6.3).

Table No. 6. 3 Scale statistics on overall score on Impact of SHG on Members

Mean Variance Std. Deviation N of Items

22.95 171.717 13.104 65

Source: Compiled from the Questionnaire

Further, Table 6.4 depicts the reliability measure through other statistical measure, e.g.,

Cronbach Co-efficient α, Spearman-Brown and Guttmann Split Half Correlations Co-

efficients. It is observed that Cronbach co-efficient α value is 0.654 for first half of items and

0.808 for the second part and sub-scales Correlation between Forms is 0.295. Spearman-

Brown correlation coefficient was 0.456 and Guttmann Split Half correlation coefficient was

0.440. Table No. 6. 4

Other reliability statistics on overall score on Impact of SHG on Members

Cronbach’s Alpha

Part 1 Value .654 N of Items 33

Part 2 Value .808 N of Items 32 Total N of Items 65

Correlation Between Forms .295

Spearman-Brown Coefficient Equal Length .456 Unequal Length .456

Guttman Split-Half Coefficient .440

Source: Compiled from the Questionnaire

6.5.3 Validity of the Instrument

Details about the validity of the instrument used in the present study about the Scale for

assessing perception of stakeholders about on whose perspective parameters to be considered

in determining Quality of SHG are discussed in section 2.9.11 (b) of the Chapter 2. It is

examined that the instrument possesses both content and external validity.

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6.6 Analysis, Discussions and Findings

(A) Test of Normality To evaluate the normality of the perceptions of different stakeholders on whether the aspects

like impact on members of SHG and its involvement in larger social issues should be core or

peripheral components of quality indicators of SHG, Kolmogorov–Smirnov test and Shapiro-

Wilk test is conducted on the total score on opinion about impact on social issues be core or

peripheral components of quality indicators of SHGs. The null hypothesis is that the data

which represents the opinion of different stakeholders on the issues collected on five point

scale is normally distributed and the alternative hypothesis is that the data is not normally

distributed. It is known that for dataset smaller than 2000 elements, hence Shapiro-Wilk test

is conducted. From the Table No. 6.5, wherein the p-value is 0.027 and hence researcher

rejected the null hypothesis and concluded that the data do not follow a normal distribution in

the population. Further, from this analysis it is observed that only Non-parametric Tests are

suitable to study the significance of the main hypothesis or goodness to fit.

Table No. 6. 5

Tests of Normality on overall score on Impact on member of SHG & Involvement in Social Issues

Overall Score

Kolmogorov-Smirnova Shapiro-Wilk

Statistic df Sig. Statistic df Sig. .068 165 .063 .982 165 .027

a. Lilliefors Significance Correction

Source: Compiled from the Questionnaire

Similarly, individual item-wise tests of Normality under Kolmogorov–Smirnov test and

Shapiro-Wilk test is also conducted and found that p-value is 0.000. Hence, the researchers

rejected the null hypothesis and conclude that the data do not follow a normal distribution in

the population (Table No. 6.6).

Table No. 6. 6

Tests of Normality on item wise score on Impact on member of SHG & Involvement in Social Issues

Tests of Normality IMPC-ID Kolmogorov-Smirnova Shapiro-Wilk

Statistic df Sig. Statistic df Sig. IMPC-1 Improvements in courage .234 165 .000 .822 165 .000 IMPC-2 Adoption of family planning

measures .176 165 .000 .891 165 .000

IMPC-3 Reduction of domestic violence .319 165 .000 .758 165 .000

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350

Tests of Normality IMPC-ID Kolmogorov-Smirnova Shapiro-Wilk

Statistic df Sig. Statistic df Sig. IMPC-4 Negative attitude towards dowry and

other social evils .267 165 .000 .808 165 .000

IMPC-5 Improvement in the literacy level .343 165 .000 .737 165 .000 IMPC-6 Awareness on children education .309 165 .000 .741 165 .000 IMPC-7 Awareness on health and sanitation .321 165 .000 .812 165 .000 IMPC-8 Awareness on food and nutrition .326 165 .000 .801 165 .000 IMPC-9 Confidences to talk within family by

women .407 165 .000 .699 165 .000

IMPC-10 Enhancement of happiness and peace in the family

.340 165 .000 .732 165 .000

IMPC-11 Enhancement of women’s economic and social empowerment

.520 165 .000 .320 165 .000

IMPC-12 Reduction in poverty through SHG .516 165 .000 .410 165 .000 IMPC-13 Improvement in technical & practical

skills through training. .361 165 .000 .719 165 .000

IMPC-14 Enhancement of employment opportunities in rural areas

.266 165 .000 .862 165 .000

IMPC-15 Enhancement of creation of assets in rural areas

.209 165 .000 .893 165 .000

IMPC-16 Enhancement of managerial abilities of women

.206 165 .000 .889 165 .000

IMPC-17 Enhancement of use of skills for income generation

.367 165 .000 .776 165 .000

IMPC-18 Orientation for groups management .336 165 .000 .777 165 .000 IMPC-19 Enhancement of sustainability and

cohesiveness of the groups .316 165 .000 .789 165 .000

IMPC-20 Enhancement of awareness about trainings organized by NGO

.373 165 .000 .685 165 .000

IMPC-21 Enhancement of setting micro enterprises/income generating activity

.447 165 .000 .577 165 .000

IMPC-22 Enhancement of participation in democratic institutions

.264 165 .000 .833 165 .000

IMPC-23 Expressing opinions freely .334 165 .000 .780 165 .000 IMPC-24 Increases the capacity to spend more .322 165 .000 .781 165 .000 IMPC-25 Increases the value of asset .366 165 .000 .741 165 .000 IMPC-26 Increases the income .370 165 .000 .632 165 .000 IMPC-27 Increases the saving .516 165 .000 .410 165 .000 IMPC-28 Enhancement of control of use of

credit .332 165 .000 .790 165 .000

IMPC-29 Enhancement of social responsibility drives

.382 165 .000 .708 165 .000

IMPC-30 Improvement in technical and practical skills through training

.421 165 .000 .676 165 .000

IMPC-31 Increase in power of decision making .489 165 .000 .398 165 .000 IMPC-32 Enhancement of ability to take risk

and uncertainties .206 165 .000 .904 165 .000

IMPC-33 Enhancement of knowledge about Banking and other Govt. operation

.461 165 .000 .483 165 .000

IMPC-34 Enhancement of legal and political awareness

.442 165 .000 .574 165 .000

IMPC-35 Creating awareness about self reliance

.356 165 .000 .769 165 .000

IMPC-36 Enhancement of societal status .317 165 .000 .791 165 .000 IMPC-37 Enhancement of creating awareness

about cleanliness of surrounding of environment

.297 165 .000 .796 165 .000

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Tests of Normality IMPC-ID Kolmogorov-Smirnova Shapiro-Wilk

Statistic df Sig. Statistic df Sig. IMPC-38 Improving communication skill .263 165 .000 .805 165 .000 IMPC-39 Inducing participation in politics .199 165 .000 .877 165 .000 IMPC-40 Induce to contest election .282 165 .000 .797 165 .000 IMPC-41 Enhancement of ability to try new

ventures .386 165 .000 .728 165 .000

IMPC-42 Enhancement of inducing to assume leadership on issues and skills

.276 165 .000 .807 165 .000

IMPC-43 Ability to transform institutions .272 165 .000 .843 165 .000 IMPC-44 Enhancement of ability to fight

injustice .296 165 .000 .814 165 .000

IMPC-45 Enhancement of ability to organize struggle

.287 165 .000 .783 165 .000

IMPC-46 Enhancement of girls’ attendance at school

.470 165 .000 .334 165 .000

IMPC-47 Enhancement of women’s contribution to village sanitation

.260 165 .000 .811 165 .000

IMPC-48 Enhancement of women’s financial contribution to household

.337 165 .000 .738 165 .000

IMPC-49 Enhancement of women’s involvement in all household decisions

.339 165 .000 .729 165 .000

IMPC-50 Enhancement of strengthened ties among women

.311 165 .000 .791 165 .000

IMPC-51 Enhancement of improved relationships with husbands

.436 165 .000 .627 165 .000

IMPC-52 Enhancement of women’s improved status in household and community

.438 165 .000 .529 165 .000

IMPC-53 Enhancement of men’s positive change in behaviour and attitude

.358 165 .000 .734 165 .000

IMPC-54 Enhancement of action to bring gender equality

.346 165 .000 .765 165 .000

IMPC-55 Enhancement of ability to understand & solve problems

.485 165 .000 .444 165 .000

IMPC-56 Reduction in children’s school dropouts

.423 165 .000 .553 165 .000

IMPC-57 Enhancement of help government in immunization programmes

.382 165 .000 .684 165 .000

IMPC-58 Enhancement of promotion of new and another SHG and is guiding it

.273 165 .000 .862 165 .000

IMPC-59 Enhancement of lobbying with administrative authorities for amenities/problem solving

.280 165 .000 .769 165 .000

IMPC-60 Enhancement of campaign against social evils

.268 165 .000 .814 165 .000

IMPC-61 Enhancement of water supply within the residential locality

.264 165 .000 .834 165 .000

IMPC-62 Enhancement of medical facility for livestock within locality

.224 165 .000 .826 165 .000

IMPC-63 Enhancement of ability to control resources

.272 165 .000 .882 165 .000

IMPC-64 Enhancement of ability to interact effectively in public sphere

.267 165 .000 .834 165 .000

IMPC-65 Enhancement of ability to participate in non-family group

.202 165 .000 .886 165 .000

a. Lilliefors Significance Correction

Source: Compiled from the Questionnaire

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352

(B) Kruskal Wallis Test Given the methodology and the nature of the data, Kruskal Wallis Test (Non-parametric

Statistical Test) is conducted to test the statistical validity of the hypothesis considered on this

objective. From the Test Statistics (Table No. 6.7), at the α= 0.05 level of significance, it may

be discerned that, given the methodology, there exists no enough evidence to conclude that

there is statistically significant difference among the opinion of the direct stakeholders of

SHGs regarding whether the aspects like impact on members of SHG and its involvement in

larger social issues should be core or peripheral components of quality indicators of SHG.

Table No. 6. 7

Kruskal Wallis Test on overall score on Impact on member of SHG & Involvement in Social Issues [Test Statistics a, b]

Overall Score on Impact on member of SHG Decision Chi-Square 7.319 Since p-value = 0.062≥

0.05, hence accepted the null hypothesis.

df 3 Asymp. Sig. .062 a. Kruskal Wallis Test b. Grouping Variable: Stakeholders Category

Source: Compiled from the Questionnaire

(C) Kruskal Wallis Test on individual items

Further, to access statement wise (individual items) differences of association among the

direct stakeholder, Kruskal Wallis Test is conducted on statements wise