Abstract
Whereas theories in various disciplines explain why men generally create more capital than women as business owners, development literature has demonstrated that poor female business owners with access to microcredit perform comparatively well. We build on object relations theory in order to explain the reported high loan repayments of all-female groups. A comparison is made based on a sample of 182 microfinance groups collected in central Mexico. Utilizing structural equation modeling, tests of latent mean differences and t-tests, this study finds support for females applying more peer-group pressure in microfinance groups than males even though social sanctions hinder loan repayments. Moreover, questioning assumptions made by object relations theory and microfinance literature, we find all-female groups do not participate more harmoniously than groups with a greater composition of males. Overall, however, all-female groups perform comparatively well in regards to the repayment of loans and financial capital creation.
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