An Overview of Social Capital: Towards an Understanding of the Normative Principles of Solidarity of Finance

The search for a development approach centered on people’s freedom and people’s participation, this paper argues, can be aided by a study of social capital. Such a study can help explain how people can be mobilized to participate in producing a collective good through voluntary joint action and cooperation with other sectors of society. In other words, a study of social capital formation is essential in shaping a freedom-centered, participatory development perspective.

Benjamin R. Quiñones, Jr., February 2006

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Summary :

A study of social capital formation would contribute to a deeper understanding of why certain types of institutions are better suited to perform in a given environment, or how an enabling environment can give rise to better performing institutions. The study would help governmental and non-governmental agencies to take actors seriously as agents of development who interpret their social contexts and who act and bring about change, rather than as ones who act on someone else’s behalf.

The present paper does not address the objectives of the study it proposes. It is largely a literature review and aims to shed some light on the process of social capital formation particularly in the microfinance sector and, on the basis of the review, to suggest the normative principles of Finance of Solidarity.