Abstract

The importance for political studies of the problems related to collective action and more generally to cooperation cannot be neglected. Some of these problems find a solution; others don't. This article is related to the growing literature about social capital. It shows that social capital (i.e. institutionalized expectations of cooperation) can help to explain the institutional performance of a microfinance programme settled in Ethiopia. In this regard, it is assumed that the rate of repayment for different credit groups is influenced by their ability to lower the transactions costs of supplying a collective good (an efficient regime). The channels through which the social capital is hypothesised working are addressed from both a theoretical and an empirical point of view. The consequences of these findings in terms both of politics and policies for development, especially in the rural areas of Ldc's, are finally assessed.