Conferences
Social Capital and Small Farmers’ Access to Formal Financial System
Marcelo Siles and Lindon Robison
Summary
Small farmers’ limited access to services offered by the formal financial system increases their costs and constrains their access to credit. This study examines how social capital can improve their access to financial services and credit on more favorable terms. Social capital consists of empathy and related emotions that internalize the well-being of others within ongoing relationships. Traditional economic research has assumed that economic agents are not influenced by relationships, self-interested, perfectly informed, and fully rational profit seekers. Research on social capital expands this perspective by recognizing the social nature of economic behavior and the value placed on relationships.
This study reports several ways in which small farmers recognize the influence of social capital on their financial management decisions. First, small farmers recognize that financial investments are motivated by both commodity needs and socio-emotional needs, including needs for internal and external validation, belonging, and transcendence. Second, where small farmers seek financial advice depends on their social capital resources rather than exclusively on formal experts. Third, the terms and levels of exchange, as well as the selection of trading partners, depend not only on commodity values and credit availability but also on the exchange of relational goods produced within social-capital–rich networks.
Based on survey results, this study concludes that social capital plays an important role in small farmers’ financial decisions including risk management. Both commodity and socio-emotional needs matter and understanding and advising small farmers’ financial decision-making requires integrating multiple forms of capital, including social capital.
Details
| Conference | 2026 Extension Risk Management Education National Conference |
| Presentation Type | 30-Minute Concurrent |