The Role of Informal Social Networks in Economic Decision-Making in Pakistani Communities

Abstract

This study investigates the role of informal social networks in shaping economic decision-making within Pakistani communities. Informal networks, including family ties, neighborhood groups, and community elders, often serve as critical channels for information, trust-building, and financial support in contexts where formal institutions may be limited. Using a mixed-method approach, data were collected from 320 individuals across rural and urban communities in Pakistan. Quantitative analyses reveal that informal networks significantly influence savings, investment, and consumption decisions, while qualitative insights highlight the importance of trust, reciprocity, and cultural norms in mediating these effects. Findings suggest that informal social networks play a complementary role to formal financial institutions and can be leveraged to improve community-based economic outcomes.