TY - JOUR AU - Banerjee,Abhijit AU - Chandrasekhar,Arun G. AU - Duflo,Esther AU - Jackson,Matthew O. TI - The Diffusion of Microfinance JF - National Bureau of Economic Research Working Paper Series VL - No. 17743 PY - 2012 Y2 - January 2012 UR - http://www.nber.org/papers/w17743 L1 - http://www.nber.org/papers/w17743.pdf N1 - Author contact info: Abhijit Banerjee MIT Department of Economics E52-252d 50 Memorial Drive Cambridge, MA 02142-1347 Tel: 617/253-8855 Fax: 617/253-1330 E-Mail: banerjee@mit.edu Arun G. Chandrasekhar Microsoft Research New England E-Mail: arc@microsoft.com Esther Duflo Department of Economics MIT, E52-252G 50 Memorial Drive Cambridge, MA 02142 Tel: 617/258-7013 Fax: 617/253-6915 E-Mail: eduflo@mit.edu Matthew Jackson Department of Economics Stanford University Stanford, CA 94305-6072 Tel: 650 723 3544 E-Mail: jacksonm@stanford.edu AB - We examine how participation in a microfinance program diffuses through social networks. We collected detailed demographic and social network data in 43 villages in South India before microfinance was introduced in those villages and then tracked eventual participation. We exploit exogenous variation in the importance (in a network sense) of the people who were first informed about the program, "the injection points". Microfinance participation is higher when the injection points have higher eigenvector centrality. We estimate structural models of diffusion that allow us to (i) determine the relative roles of basic information transmission versus other forms of peer influence, and (ii) distinguish information passing by participants and non-participants. We find that participants are significantly more likely to pass information on to friends and acquaintances than informed non-participants, but that information passing by non-participants is still substantial and significant, accounting for roughly a third of informedness and participation. We also find that, conditioned on being informed, an individual's decision is not significantly affected by the participation of her acquaintances. ER -