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Abstract

This paper examines whether recently introduced "village funds", one of the largest microfinance programs ever implemented, improve access to finance. Village funds are analyzed in a cross-sectional approach in relation to competing financial institutions. We find, first, that they reach the target group of lower income households better than formal financial institutions. Second, village funds provide loans to those kinds of borrowers which tend to be customers of informal financial institutions. Third, village funds help to reduce credit constraints. Thus, village funds provide services in the intended direction. However, they do this to a quite limited degree, questioning their efficiency.

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File URL: http://www3.wiwi.uni-hannover.de/Forschung/Diskussionspapiere/dp-417.pdf
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Bibliographic Info

Paper provided by Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Leibniz Universität Hannover with number dp-417.

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Length: 39 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:han:dpaper:dp-417

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Phone: (0511) 762-5350
Fax: (0511) 762-5665
Web page: http://www.wiwi.uni-hannover.de/
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Related research

Keywords: informal financial institutions; microfinance; credit constraint; Thailand; Asia;

Find related papers by JEL classification:

• O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
• O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
• G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

This paper has been announced in the following NEP Reports:

• NEP-ALL-2009-05-30 (All new papers)
• NEP-DEV-2009-05-30 (Development)
• NEP-MFD-2009-05-30 (Microfinance)
• NEP-SEA-2009-05-30 (South East Asia)
• NEP-SOC-2009-05-30 (Social Norms & Social Capital)

References

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