Effect of Credit Cooperatives in Employment Generation: Evidence from Rural Nepal

Abstract

Small-scale lending services have become increasingly prevalent among rural communities in the developing world. Many entrepreneurs seek the services of credit cooperatives to fund their initial business ventures. These loans can have an enormous impact on the business’s success, including its ability to generate employment opportunities. This paper, in particular, studies the impact of micro loans from credit cooperatives on employment generation and hiring capacity of the small businesses in Kabre Village Development Committee in the Dolakha District of Nepal. The paper uses the census approach to data collection, utilizing both quantitative and qualitative methods. The findings suggest that the majority of the credit beneficiaries are able to increase self-employment, which enables them to support their families. However, the potential for new job creation that would subdue the problem of excess demand for employment in the area is minimal. The study suggests that credit cooperatives should expand their services to include more training opportunities that would improve the hiring capacity of the local businesses. These changes would foster business growth among rural entrepreneurs, allowing them to hire more employees to address the challenges of high unemployment rate in the rural areas of Nepal.