Impact of Self-Help Group Participation on Economic Empowerment: Mediating Roles of Social Capital, in Rural India

Abstract

The present study examines the effect of Self-Help Group (SHG) participation on economic empowerment, emphasising the mediating role of social capital among rural households in the Devipatan region of Uttar Pradesh, India. Grounded in Social Capital Theory and the Conservation of Resources (COR) framework, the research addresses a critical gap in rural development literature by examining how motivational drivers and institutional support translate into empowerment outcomes. In a survey of 389 members of the SHG, living in the Devipatan area and using PLS-SEM modelling, the findings reveal that economic motivation and economic security are the strongest predictors of SHG participation, followed by social motivation and institutional support. SHG participation significantly enhances social capital—measured through trust, reciprocity, networks, and information sharing—which in turn exerts a strong positive effect on economic empowerment. Notably, the direct relationship between SHG participation and economic empowerment is insignificant, while the indirect effect through social capital is significant, confirming full mediation. This highlights that SHGs function primarily as social institutions that convert relational resources into economic capability rather than as direct income-generating mechanisms. The study’s novelty lies in integrating motivational constructs, institutional embeddedness, and mediation analysis within a unified structural model in a relatively underexplored North Indian context. Policy implications emphasise prioritising social capital formation alongside financial inclusion initiatives to achieve sustainable empowerment outcomes.