Joint Liability Groups Research Articles

Impact of Microfinance on Rural Development through Joint Liability Groups

Microfinance stands out as a crucial financial inclusion mechanism, addressing the needs of individuals who find themselves excluded from the formal financial system. By breaking down barriers, microfinance ensures that even the most excluded individuals have the opportunity to benefit from a range of financial services, fostering economic empowerment and inclusion. The present study examines the role of microfinance on rural development through Joint Liability Groups (JLGs) with special reference to Kerala. The study also examined the trend of loans distributed to the southern region of India through JLGs for the last five years. The study used a descriptive research design and collected data from 385 beneficiaries through a purposive sampling method. The study revealed that microfinance has a positive influence on the rural development of Kerala. The researcher identified five predictors such as social development, economic development, financial development, employment generation and financial inclusion and dependent variable is rural development. The result shows that 99.6% attributed to microfinance on rural development in Kerala.

Challenges Faced by Women Collectives in Lease Land Farming in Thrissur District, Kerala State

Lease land farming by women collectives is an initiative introduced by Kudumbashree to encourage cultivation among self - help groups. It not only contributes to significant changes in the lives of women farmers but also helps to increase agricultural production by bringing the fallow and cultivable waste- land into agricultural use. The present study was conducted in Thrissur district from June to August 2022. An ex-post- facto research design was used. Two blocks, Kodakara and Ollukkara, representing more area of banana and vegetable respectively under leased land farming were selected. From these blocks, two panchayats each, were randomly selected. From Kodakara, Mattathur and Kodakara and from Ollukkara, Nadathara and Puthur panchayats were selected for the purpose. From these two panchayats, fifteen women joint liability groups were selected randomly, comprising 60 women farmers each who cultivate vegetables and banana under leased land. Thus, the total sample comprised of 120 women farmers. The data were collected with the help of a semi - structured pre - tested interview schedule. Garrett ranking was employed to explore the challenges faced by women collective farmers. The challenges were categorised under four categories i,e., lease land related, group related, technical and supplies, and services. Among land related challenges, the non - legalized status of leasing was ranked as the most serious one where the mean score was 63.10. Absenteeism of members was ranked first, accounting for a mean score of 61.29, with respect to group related challenges. Improper maintenance of records on farm expenses (68.63) and price fluctuations (78.7) were ranked first in technical and supply challenges respectively.

Choosing partners: selection priorities of joint liability group leaders

Choosing partners: selection priorities of joint liability group leaders

Analysis of Social Capital Effect in the Joint Liability Group on the Performance of Sharia Cooperatives in Indonesia

This investigation aims to analyze the impact of the joint liability model on the sharia cooperatives’ performance in Indonesia. The respondents are several group lending members of sharia cooperatives in Java, the center of sharia cooperatives in Indonesia. This study utilized the purposive sampling method to select samples conducted in April 2021. Data collection was carried out by distributing online and offline questionnaires to several sharia cooperatives utilizing the joint liability model. Data from 98 respondents were further analyzed by PLS-SEM analysis. The results unveiled that joint liability, which was influenced by indicators of trusts, norms, and networks, had a positive and significant effect on sharia cooperatives’ performance as measured by members’ satisfaction and loyalty. Thus, sharia cooperatives can take advantage of and maintain the joint liability model based on trusts, norms, and networks. The rationale is that the joint liability application has followed cooperative principles: the principle of kinship and cooperation. In addition, such a model has proven to increase the loyalty and satisfaction of sharia cooperative members.

Assessing the determinants of microfinance in India: a case study of the joint liability groups of the Northern Karnataka region

Assessing the determinants of microfinance in India: a case study of the joint liability groups of the Northern Karnataka region

Role of JLG’s(Joint Liability Groups) in Enhancing Village Economy

JLGs (Joint Liability Groups) help to enhance village economies by providing local jobs, livelihoods, and income, as well as eliminating poverty and creating an inclusive economy. JLG is an informal group of four to ten persons who share a common socioeconomic background, reside in the same neighbourhood, and engage in similar activities. To begin earning a living, all participants agree and take out a loan in groups. JLG’s are formed with the support of FPOs, Kudumbashree, KVKs (Krishi Vikas Kendras), ATMA (Agriculture Technology Management Agency), and local nationalised and cooperative banks. In this study, I investigated the various models of JLG’s and their techniques, the extensive participation of women in all aspects of agricultural and allied activities as well as the obstacles they have in selling their products, generating money and other sources of income, and how group formation empowers women.

The Impact of Joint Liability Group Lending on Lowering the Risk of Farmer and Agriculture Crowdfunding in Indonesia

Research on agriculture crowdfunding in developing countries is still limited. The crowdfunding platform offers uncollateralised loans to farmers. Therefore, they apply joint liability group lending to lower the default risk. However, from farmer’s point of view, joint liability causes higher risk since every group member bears his/her own risk and that of all other group members. Thus, the purpose of this article is to analyse how joint liability may lower the risk of both farmer and agriculture crowdfunding in Indonesia. A deductive qualitative research design with case study approach is used in this article. A series of in-depth interviews were conducted with one agriculture crowdfunding platform and two farmer groups. Data analysis was conducted by using pattern matching technique. The findings of this article are as follows: joint liability may lower the default risk of crowdfunding platform because the farmer groups are self-selected. The leader of the farmer group plays an important role in monitoring the members, and he may apply social sanction to the defaulting member. By implementing joint liability group lending, crowdfunding platform can provide extension services such as price certainty through contract farming, field agent monitoring and non-cash credit disbursement. These extension services help to lower the farmer’s risk.

Growth Analysis of Joint Liability Groups (JLGs) in India - With Special Reference to Tamil Nadu

Joint Liability Groups (JLGs) has been a noteworthy developmental mechanism in microfinance group-lending model advancing towards uplifting materialistic collateral-less and unbanked poor society in the direction of self-sustainability through easing access to formal financial services with a proposal for self-employment which remained to be pursued as their dream for so long. The present study seeks to document expansionary trend in JLGs and to identify major benefits, constraints and suggestions of JLG member-beneficiaries with purview of supporting further development towards promoting and financing more JLGs in India.
 Aim: The present study attempts to document the trend in growth of JLGs supported by National Bank for Agriculture and Rural Development (NABARD) in India and to identify major benefits, constraints and suggestions in functioning of JLGs through Bank-Business Corporate (BC) linkage model among its member-beneficiaries which would serve researchers and policy makers to arrive at appropriate measures to expedite advancement in expansion and magnification of trend of JLGs in India.
 Design of Study: The study employed secondary data from annual publication of NABARD “Status of Micro Finance in India” for 2011-12 to 2019-20 for JLG trend analysis. Following purposive sampling, 3 blocks of Namakkal district were studied during August 2021, purposively selecting Bank-Business Corporate (BC) linkage model and randomly selecting well-experienced 30 member-beneficiary groups.
 Methodology: The study adopted Compound Annual Growth Rate (CAGR) for JLG trend analysis and Garrett’s ranking procedure to prioritize major benefits, constraints and suggestions of JLG members.
 Findings:
 
 Overall growth rate of India stands at 44.86% in terms of number of JLGs promoted and 60.73% in terms of quantum of JLG loan disbursed. Northern region excels growing at the rate of 62.53% in the former category while Western region exhibits expeditious rate of growth (75.19%) in the latter.
 Tamil Nadu leads the lane in terms of cumulative quantum of credit disbursed ranking second to Bihar in terms of cumulative number of JLGs promoted in India. Orissa manifests rapid growth among leading five states in both categories cumulatively.
 
 With women empowerment socially and economically, easy access to formal credit and better repayment as major benefits of JLG participation, hiking initial loan amount, aiding in identification of microenterprise, training and capacity building in related fields, introducing technological innovation on demand-side and linkage to product marketing and brand promotion on supply side were suggested areas of concern towards encouraging massive promotion of JLGs..

Penetration of farm mechanization services through FPOs: rural dynamics-based business modelling

Farm mechanisation although one among the essential input to raise the agriculture productivity, but individual owning of agricultural machinery by resource constrained small and marginal farmers who constitute around 85% of operated land holdings in India is uneconomical. Hence, innovative arrangements such as custom hiring centres’ (CHCs) are being encouraged through farm aggregation models like cooperative farming, Joint Liability Groups (JLG), Farmer Producer Organizations (FPOs) to get access to farm machinery services at affordable prices and promote mechanization of operations on small farms. With this background, the present study is taken upto assess the feasibility for the establishment of FPO owned and operated model custom hiring centre (CHC) in Nimmanapalle mandal of chittoor district of Andhra Pradesh state and formulate suitable business strategies for ensuring viability of the unit. The sample size of the study was 120 farmers. The major crops grown in the study area are tomato, paddy and groundnut and the market potential for farm machinery is estimated at Rs. 269.73 lakhs. The SWOT analysis conducted indicated the opportunity for establishment of CHC due to inadequate farm machinery services, labour shortages and farmers habituated to hiring services. The financial assessment for the proposed unit over a five year period showed that the unit is worth investing as reflected by positive NPV of 6.56 lakhs at 12% discount rate, BCR of 1.05 and IRR of 17.27%. The debt service coverage ratios of greater than two from second year onwards and annual increase of positive cash accruals signifies the unit strength in meeting the debt obligations. The unit if established shall have long term social benefits that includes increase in input use efficiency of farm resources due to timeliness of operations, productivity, yields, income levels in addition to creation of employment in non-farm sector.

Behavioral impact of debt-output nexus in joint liability group lending: evidence from the Israeli Moshavim

ABSTRACT The Israeli Moshavim were agricultural cooperative associations grouped into regional procurement associations, operated under a mechanism of joint liability lending until the 1985 debt-crisis. Unique historical financial-panel-data offers behavioural insights into the joint liability group lending, through constructing Moshavim’s Debt-To-Output (DTO) ratio distribution. The right-tailed exponential distribution captures the finding that a small portion of the Moshavim were debtors. A semi-parametric model synthesises between the debtors and the creditors. While a joint liability mechanism might boost risk-receptiveness and excessive optimism concerning the peer’s accountability for some, it carries a reversed effect for others. Thus, the failure of the mechanism might be unavoidable.

Group Leasing Approach to Sustain Farming and Rural Livelihoods: The Journey of Women Farmers in Kudumbashree Kerala

Context: Post-independence land reform, facilitated tillers to own land, but banning tenancy limited formal access to land by discouraging (non-cultivating) landowners from leasing out their land, while the predominantly capital-poor farmers could not afford to purchase. Along with poor returns from agriculture, this forced many men from rural Kerala to migrate, increasing fallowing of cultivable land as well as a dependency on other states for food. Though women became more involved in farming, they rarely hold land legally in their name and struggle to have secure access to good productive farmland. Typically not recognized as farmers, women are often seen as ‘agricultural workers’ or ‘helpers on family farmers’ and face barriers accessing agricultural entitlements and services intended for farmers. Interventions: Drawing upon the success of women’s collectivization around micro-credit and other socio-economic interventions, Kudumbashree, through its multi-tiered women’s collectives, promoted sustainable agriculture based livelihoods among women by enhancing their access to land through (informal) collective land leasing and supporting women farmers to access agricultural services and entitlements. This approach was later adopted as part of the Mahila Kisan Sashaktikaran Pariyojana (MKSP), as a sub-component under the National Rural Livelihoods Mission (NRLM), while also leading to the local recognition of women as farmers. Lessons: Collective farming can help recognition of women as farmers by enabling them to access cultivable land, finance, agriculture extension, entitlements and markets. However, to ensure tenure security (viz. long-term access to an economic size of productive lands) and assured access to farm entitlements, land leasing legalization and having their name on land records will be critical. Short-term measures, viz. involving the panchayat in leasing process and providing for a minimum lease duration for fallow lands developed through MGNREGA, can ensure longer terms and add local legitimacy to leases. As a Government Order can ensure this, other states can adopt this to enhance secured land access for women’s self-help groups and joint liability groups.

Process Views of Peer Mechanism in Joint Group Lending through the Theoretical Lens of Agency Theory: A Systematic Review of Literature

Formal institutions are unwilling to lend to the micro poor due to information asymmetry and lack of physical collateral, (Rai & Sjöström, 2010), (Angelucci, Karlan et al., 2015). However, group lending helps to address this problem by leveraging social capital, (Harriss & de Renzio, 1997). The goal of this study is to see how Peer Monitoring, Selection and Enforcement might help formal financial institutions to overcome Moral Hazard and Adverse Selection issues that come with working with disadvantaged borrowers in an agency relationship. The systematic literature review method was used to conduct the analysis. This study examines the growth of literature in the field of joint liability via the theoretical lens of agency theory, as well as a process view of literature in the field of Peer monitoring, selection and enforcement. According to the study, adverse selection in a Joint Liability Group is mitigated by Peer Selection which is motivated by social ties and borrower risk type and moral hazard is mitigated by Peer monitoring and enforcement. In a group, Peer mechanism is a major factor that mitigates agency problems and default in repayment of loans, (Noglo & Androuais, 2015). There is scope for further research in the domain of impact of risk diversification and random matching on the sustainability of Joint Liability Group.

An evaluation of microfinance in India a study with special reference to Joint Liability Group (JLG)

An evaluation of microfinance in India a study with special reference to Joint Liability Group (JLG)

THEORETICAL ANALYSIS OF MICROFINANCE ON POVERTY ALLEVIATION

The objective of this paper is to investigate theoretical background of microfinance and poverty alleviation. The article consist the two types of theories, which related to microfinance. First types of theories addresses the specific issues the poor have to face when seeking access to formal financial resources, due to the lack of collateral and second types of theories. The second set of theories are based on the impact of microfinance on small businesses, households and individuals. The first category of theories consist Theory relating to Emergence of Microfinance, Concept of Joint Liability Group in Microfinance. Theories of impact pathway of microfinance consist Theory on Shortcomings of Development Finance Strategies, Market and Welfare Theories, Poverty Lending Approach, Financial System Approach and5 Financial Integrated Approach

SEQUENTIAL GROUP LENDING WITH AND WITHOUT GROUP LIABILITY; GRAMEEN I VERSUS GRAMEEN II

The paper shows that in absence of any physical collateral, sequential group lending with joint-liability fails to guarantee loan repayment by borrowers because of the coordination problem among the borrowers. The model finds that under certain conditions, profits can be higher under joint-liability group lending if one can ensure peer pressure is adequate to guarantee there is no strategic default, i.e., repayment when the borrower has earned enough to be able to repay. From the lender’s point of view, the individual lending contract may turn out to be a better option than joint-liability group lending under certain circumstances.

Collective farming and women’s livelihoods: a case study of Kudumbashree group cultivation

ABSTRACT This study estimates crop productivity and incomes from crop production for women farmers undertaking collective farming with the Kudumbashree organisation. The method used to collect data on farm incomes broadly follows the CACP (Commission for Agricultural Costs and Prices) methodology for calculating costs. The unit of our study will be the Joint Liability Group (JLG). The study aims to delineate the reasons for differential performances amongst the groups and to see whether these groups are successful as a viable alternative to individual farming and whether they can realise the theoretical advantages of group cultivation.

Factors influencing the borrower loan size in microfinance group lending: a survey from Indian microfinance institutions

Purpose The purpose of this paper is to analyze the impact of the cost of microfinance intermediation on borrowers’ loan size. The identified transaction cost and credit risk factors tell about what a lender takes into accounts while screening and allocating loan amounts to the borrowers, where the lender has limited information about the client’s ability to repay. Design/methodology/approach The analysis is based on the primary data collected from a sample of 498 microfinance institutions (MFI) linked group clients covering two microfinance leading states of India. Findings Empirical findings suggest that the cost of microfinance intermediation has an impact on borrowers’ loan size. To reduce the cost, the MFIs lend big loans to clients having a high income, assets, land size, lower informal borrowings and having longer loan experiences. In MFI lending, the younger and less educated people are the ones who demand bigger loan amounts. The geographical distance of borrowers’ location from MFI offices, group size and interest rate are the other factors that influence the loan size. Originality/value The past empirical works seem to have not focused on how the cost of microfinance intermediation creates loan size variation among the borrowers in joint liability group lending. The endogeneity problem has not been resolved. The present article thus identifies the factors that influence the individual member loan size by using two-stage least squared regression to tackle the issue of endogeneity.

The Role of Social Capital in Risk-Taking Decisions under Joint Liability Lending

Joint liability group lending has come under scrutiny for failure to promote profitable risk-taking among smallholder borrowers in developing countries. One possible explanation for the absence of profitable risk-taking is the collateral-like effect of social capital, which borrowers fear losing if they default. In this paper, we use data from a framed field experiment and a survey administered in Tanzania to empirically investigate the relationship between social capital and risk-taking. We find that borrowers with more close relationships (family and friends) in their borrowing group increase risk-taking yet borrowers with more relationships that induce negative moral emotions (shame and guilt) reduce risk-taking.

SWOT Analysis of Joint Liability Group

SWOT Analysis of Joint Liability Group

Impact of Microfinance on Enterpreneurship Development: A Case Study of JLGS Lucknow, Uttar Pradesh, India

This research study investigates the impact of microfinance schemes on entrepreneurial development in lucknow district. To achieve the stated objective of the study, three research questions were formulated. The descriptive research design was adopted for the study. The Population for our study encompasses the joint liability groups who have been engaged in microfinance activities and are the beneficiaries of microfinance credit.250 JLGs respondents were selected from lucknow District according to simple random sampling method The researcher used questionnaire as an instrument of primary data collection. Tables and simple percentages were used in data presentation. For clear analysis, the study centres on two broad variables; the dependent variable which is entrepreneurial development and the independent variable which is microfinance institutions. The study reveals that i there is a significant difference in the number of entrepreneurs who used microfinance institutions and those who do not use them; ii there is a significant effect of microfinance institutions activities in predicting entrepreneurial productivity; and iii that there is no significant effect of microfinance institutions activities in predicting entrepreneurial development. The researcher concludes that microfinance institutions world over and especially are identified to be one of the key players in the financial industry that have positively affected individuals, business organizations, other financial institutions, the government and the economy at large through the services they offer and the functions they perform in the economy.