relational styles in micro-finance

A long standing issue in network analysis is the analysis of when people initiate and maintain relationships. Rodrigo Canales and Jason Greenberg have a forthcoming Management Science paper that uses data from interaction between micro-finance loan officers and clients to establish that interactional style is one of the big drivers of relationships. From the abstract:

Social scientists have long considered what mechanisms underlie repeated exchange. Three mechanisms have garnered the majority of this attention: Formal contracts, relational contracts, and relationally embedded social ties. Although each mechanism has its virtues, all three exhibit a common limitation: An inability to fully explain the continuation and stability of inter-temporal exchange between individuals and organizations in the face of change. Drawing on extensive quantitative data on approximately 450,000 microfinance loans made by an MFI in Mexico from 2004-2008 that include random assignment of loan officers, this research proposes the concept of “relational styles” to help explain how repeated exchange is possible in the face of personnel change. We define relational styles as systematically reoccurring patterns of interaction employed by social actors within and across exchange relationships — in this paper, between microfinance clients and loan officers. We show that relational styles that are consistent facilitate a clear understanding of expectations and thus exchange. We also demonstrate that consistency in the relational styles followed by successive loan officers mitigates the negative impact of a broken loan officer-client tie. This paper thus proposes and empirically tests a social mechanism based on relational styles that often accompanies relational embeddedness, but may also serve as a partial substitute for it.

Check it out!!!

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Written by fabiorojas

July 16, 2015 at 12:01 am

One Response

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  1. Thanks, this is really interesting. Without depreciating the importance of looking at consistent relational styles in maintaining banking relationships, the article also made me wonder how relational styles might vary depending on the characteristics of the customer, and how that might create or perpetuate inequalities.

    In particular, I heard last week on NPR about a study of racial differences in how bank officers treat small business owners looking to borrow (story here:, academic article here: Unsurprisingly, the researchers found that “everybody who saw the tapes agreed: bank officers were just nicer to white applicants.” One could imagine that some organizations might encourage relational styles that are more consistent across types of customers — and perhaps even that those organizations might be more successful.



    July 16, 2015 at 4:41 pm

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