Capabilities, conversion factors and institutions

Sen’s capability approach emphasizes the importance of freedom and choice in leading the life that one values. In the capability approach, a person converts the vector of commodities into functionings. This conversion depends upon personal, social and environmental factors. These conversion factors are important because they constrain the capability achievement of individuals, a matter that is especially important for the poor. Using the case of a credit cooperative in Malaysia, this article seeks to demonstrate the importance of conversion factors and how it is possible to improve the capabilities of the poor.