Collective Loans for Bulgaria's Self-Employed: A Field Study of Social and Financial Capital on Enterprise Growth

The purpose of this paper is to increase understanding of how collective lending strategies leverage social capital to improve firm performance. Drawing on economic and sociological perspectives and fieldwork in Bulgaria, I argue that social capital may enhance the effects of financial capital on firm performance in microenterprises. Findings show that a collective lending strategy facilitates greater firm performance than individual lending--due partially to the increased social capital it creates for the entrepreneur. These findings come from a multi-method field study conducted in Bulgaria, where qualitative data were collected from over 40 business owner interviews. The findings have implications for theoretical and practical application within the field of microfinance.