This study investigates empirically the impact of social capital on the rural credit. Social capital is focussed on three aspects of local association: number of memberships, meeting attendance, and participation in decision-making of head of households.
Estimation results indicate difference impact of social capital on each type of credit. Meeting attendance was found positively influence the amount of formal credit. Meanwhile, number of memberships negatively affects the amount of informal credit. This study also confirms that the rural elites have more accessibility to economic opportunities such as formal credit than non-elites do.
Therefore, this study suggests that the implementation of formal credit program in rural areas should consider not only the existing social capital but also the social structure of the rural society. This approach perhaps bring improvement on the role of formal credit program as an anti poverty program in rural areas.