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Does the village fund matter in Thailand ?

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  • Boonperm, Jirawan
  • Haughton, Jonathan
  • Khandker, Shahidur R.

Abstract

This paper evaluates the impact of the Thailand Village and Urban Revolving Fund on household expenditure, income, and assets. The revolving fund was launched in 2001 when the Government of Thailand promised to provide a million baht (about $22,500) to every village and urban community in Thailand as working capital for locally-run rotating credit associations. The money – about $2 billion in total – was quickly disbursed to locally-run committees in almost all of Thailand’s 74,000 villages and more than 4,500 urban (including military) communities. By May 2005, the committees had lent a total of about $8 billion, with an average loan of $466. Using data from the Thailand Socioeconomic Surveys of 2002 and 2004, each of which surveys almost 35,000 households, the authors find that the borrowers were disproportionately poor and agricultural. A propensity score matching model finds that Fund borrowing in 2004 was associated with, on average, 1.9 percent more income, 3.3 percent more expenditure, and about 5 percent more ownership of durable goods. These results are broadly consistent with the results from instrumental variables models (where the identifying instrument was the inverse of village size), which however show a smaller (marginal) effect. Households that borrowed both from the revolving fund and from the Bank of Agriculture and Agricultural Cooperatives gained substantially more in terms of higher income than those who borrowed from either one or the other or from neither.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5011.

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Date of creation: 01 Jul 2009
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Handle: RePEc:wbk:wbrwps:5011

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Keywords: Access to Finance; Debt Markets; Economic Theory&Research; Rural Poverty Reduction;

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Cited by:
  1. Kislat, Carmen & Menkhoff, Lukas & Neuberger, Doris, 2013. "The use of collateral in formal and informal lending," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79765, Verein für Socialpolitik / German Economic Association.
  2. Khandker, Shahidur R. & Samad, Hussain A., 2013. "Are microcredit participants in Bangladesh trapped in poverty and debt ?," Policy Research Working Paper Series 6404, The World Bank.
  3. Rasmus Heltberg & Naomi Hossain & Anna Reva, 2012. "Living through Crises : How the Food, Fuel, and Financial Shocks Affect the Poor," World Bank Publications, The World Bank, number 6013, August.
  4. Giovanni Andrea Cornia & Bruno Martorano, 2013. "Development policies and income inequality in selected developing regions, 1980-2010," Working Papers - Economics wp2013_13.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  5. Boonperm, Jirawan & Haughton, Jonathan & Khandker, Shahidur R. & Rukumnuaykit, Pungpond, 2012. "Appraising the Thailand village fund," Policy Research Working Paper Series 5998, The World Bank.

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