Group Centric Microfinance for Financial Inclusion: Theories and Empirics

We begin with the relevancy of the group-centric microfinance for faster inclusive growth in India and develop a social exclusion index for each state. It analyzes the association between inclusion financial index, group-centric microfinance, and human development index. A glimpse on the group-centric microfinance across the globe has been presented in chapter three. It includes a clear distinction between SHG model and Grameen Bank model. Chapter four is devoted to the theoretical explanations relating to group-centric microfinance with particular reference to peer monitoring, adverse selection, moral hazard, and welfare. The endogeneity problem relating to participation in SHG and its consequences has also been discussed. Chapter-five cites a selected literature review that motivates us to study the impact of centric group microfinance on different dimensions of financial inclusion of the rural people. The empirical part of this book has quantified the impact of SHGs addressing endogeneity problem on financial inclusion of the rural poor in the district of Bankura in West Bengal. It reveals that SHGs are advantageous in extending affordable credit without collateral to the rural poor. Finally, we focus on some alternative policies and limitations regarding financial inclusion in India.