Social capital

Abstract

Purpose – The paper examined the mediating effect of social capital in the relationship between social intermediation and financial services in Ugandan micro finance industry. The purpose of this paper is to establish the role of social capital in the relationship between social intermediation and financial services access. Design/methodology/approach – The paper adopted the MedGraph program, Sobel tests and Kenny and Baron approach to test for mediation effects. Findings – It is clear that the true drivers of access to financial services in the micro finance industry are social intermediation and social capital. However, social capital exhibits partial form of mediation in the relationship between social intermediation and access to financial services. Research limitations/implications – A single research methodological approach was employed in the study. Owing to limitations associated therein, future research through interviews could be undertaken to triangulate. Practical implications – Since social capital is found to be a causal chain in the relation between social intermediation and financial serves access in this study, managers in the micro finance industry should endeavor to reinforce agents of social capital (i.e. trust and social networks) since the lending relationships between the micro-finance operators and marginalized communities are driven by social collateral. Originality/value – This is the first study that focuses on testing the mediating effect of social capital in the relationship between social intermediation and financial services access in the Ugandan microfinance industry.