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Title: Social capital, network effects and savings in rural Vietnam
Authors: Newman, Carol
Tarp, Finn
Broeck, Katleen Van Den
Keywords: Household savings
Information failure
Social capital
Women's Union
Issue Date: Mar-2014
Series/Report no.: WIDER Working Paper 39/2012;Volume 60, Issue 1, Page 79–99
Abstract: Information failures are a major barrier to formal financial saving in low-income countries. We explore the extent to which social capital in rural Vietnam plays a role in increasing formal savings where knowledge gaps exist. Social capital is defined as information sharing and the elimination of information asymmetries through active participation in the Women's Union. We consider high- and low-quality networks in terms of the quality of information transmitted. We find that membership of high-quality networks leads to higher levels of saving in formal financial institutions and saving for productive investments. Our results support a role for social capital in facilitating savings and suggest that transmitting financial information through the branches of the Women's Union could be effective in increasing formal savings at grassroots level. We also conclude that it is important to ensure that the information disseminated is accurate given that behavioral effects are also found in networks with low-quality information.
Appears in Collections:Labor and social protection

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