Social Capital and Performance of Cooperatives in Kathmandu

Abstract

This study examines the role of social capital in the success of savings and credit cooperatives in Nepal, focusing on four case studies: Thankot Mahila, Samudayik, Aayam, and Chandragiri cooperatives. Despite their growing importance in financial inclusion, many cooperatives struggle with governance inefficiencies, gender disparities, and financial sustainability. This research addresses a critical gap by analyzing how trust, networks, reciprocity, and shared norms contribute to cooperative performance while highlighting persistent challenges in equitable representation. Using a qualitative case study approach, the study combines financial data analysis (2079-2081), unstructured interviews with 16 stakeholders including board of members, managers, and members, and focus group discussions (FGDs) with 16 members. Thematic analysis and comparative financial metrics reveal key insights: (1) Cooperatives with balanced gender representation (e.g., Samudayik) achieve stronger financial outcomes (54% capital growth) than male-dominated models; (2) Externally networked cooperatives demonstrate greater resilience than locally insular ones; and (3) Institutionalized social capital—particularly transparent governance and member participation—correlates with long-term member loyalty (average 12 years). This study demonstrates that social capital serves as the bedrock of cooperative success, operating through four interconnected mechanisms that distinguish member driven finance from conventional banking models. Trust, institutionalized through transparent policies and long-term member relationships, reduces transaction costs and fosters financial resilience—evident in cooperatives like Samudayik, where high trust correlates with 54% capital growth. Networks determine institutional adaptability; externally connected cooperatives access bridging capital for innovation, while locally embedded models like Thankot Mahila excel in bonding capital for targeted inclusion. Crucially, reciprocity transforms financial transactions into mutual commitments. The save-to-borrow systems observed across cases create inter generational solidarity, ensuring sustainability. Keywords: Social capital, cooperatives, gender governance, financial inclusion.