Microfinance and Entrepreneurship: The Enabling Role of Social Capital among Female Entrepreneurs

This paper examines mechanisms through which social capital strengthens microfinance impact on fostering female entrepreneurial success. Specifically, the study focuses on how and to what extent resources embedded in social networks determine microfinance impact on entrepreneurial success. Survey data were collected from 276 female micro- institutions entrepreneurs using multi-stage stratified random sampling across 80 micro-finance institutions in three South-Western Nigerian states. Hypotheses were tested using ordinal regression analysis. The study found that relational and network social capital had a positive and significant influence on female entrepreneurial success. Specifically, intra-group trust and productive network ties among female entrepreneurs in poor communities predicated the positive impact of microfinance on entrepreneurial success. Also, resources embedded in networks are more positively correlated to education level and marital status. Furthermore, microfinance could have a more positive impact for borrowers with sustainable relationships with loan officers who organise microfinance provisions and understand the entrepreneurs' context. The research provides empirical evidence for the relationship dynamics between female entrepreneurs and microfinance institutions by emphasising the importance of deploying different forms of social capital in sustaining microfinance impact on female entrepreneurial success.