The Psychological Effect of Mental and Social Assets on the Efficiency of Microfinance Institutions

Abstract

Introduction: Microfinance Institutions (MFIs) are businesses that provide low-income people and communities that often do not have access to regular banking services and financial services such as modest loans, savings accounts, and insurance products. Strong social relationships and networks help MFIs reach and assist more prospective customers. Mental assets are especially important in the framework of MFIs for the staff members who deal with consumers and oversee the institution's operations.

Methods: The impact of social and mental resources is regarded as one of the newest development strategies. In MFIs, social intermediation is seen as one of the key links in the process of replacing mental assets. With the use of empirical data, this research analyzes the link between mental and social resources and the effectiveness of MFIs and attempts to quantify its effect on the social empowerment of women. The study is based on primary data that was gathered from a random sample method used to choose 128 women from the Self Help Groups (SHGs) founded by a significant production firm in Karnataka, India, as part of its corporate social duty program. Only the amount of outstanding debt affects mental assets. The indices of optimism and depressive symptoms in people's mental health don't seem to be impacted by financial access.

Results: The result shows a strong positive correlation between mental and social resources and MFI effectiveness. The perceptions of SHG members regarding the alterations that the MFIs have caused in their lives are determined using a Likert scale about 15 factors related to capacity building, active and collective involvement in social and mental life, and knowledge rising to bring about desired alterations. It also shows that the influence of financial access on the mental health and financial standing of microfinance consumers is quite modest.

Conclusion:  The report comes to the conclusion that the organization's MFIs have generated social assets and metal that empowers SHG members. According to the study, social asset formation is not a natural process; instead, companies must intentionally cultivate it by putting into practice various laws, including programs to expand capacity, the improvement of decision-making abilities, etc.