How not to punish your neighbour: Microfinance and second-order free riding in rural China
Abstract
Purpose
The paper aims to better understand why borrowers do not sanction one another in group-lending microfinance programmes.
Design/methodology/approach
The paper utilises interviews conducted in 16 villages in Western China. The data were complemented by ethnographic fieldwork of an NGO in the region.
Findings
The paper confirms the relevance to microfinance of existing literature showing that punishing others is costly, so people tend to wait for others to do it. It also reveals the existence of particularistic metanorms – norms of sanctioning that focus on whom one can and cannot punish. Additionally, it shows that people may punish according to whether they believe others are punishing.
Research limitations/implications
The results are not immediately generalisable to all group-lending programmes.
Originality/value
Fieldwork in rural China is difficult to conduct. Although cultural and social patterns are known to be important in development work, little is known about how it affects microfinance.
Keywords
Acknowledgements
The author would like to thank the villagers and staff in the field site who generously shared their time. This research was supported by the Fellowship of Woodrow Wilson Scholars, Center for the Study of Religion at Princeton University, and the Peking University Harvard-Yenching Institute.
Citation
Yang Hsu, B. (2014), "How not to punish your neighbour: Microfinance and second-order free riding in rural China", International Journal of Development Issues, Vol. 13 No. 2, pp. 113-128. https://doi.org/10.1108/IJDI-03-2014-0019
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited