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Social Capital and Market Imperfections: Accessing Formal Credit in Thailand

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  • Thomas Dufhues
  • Gertrud Buchenrieder
  • Nuchanata Munkung

Abstract

Social capital matters in the economy. This study shows how different forms of individual social capital affect access to formal credit in rural Thailand. Social capital is defined as interpersonal network (ties) resources. A data collection approach is used that originates in the field of sociology and is innovative in the context of development economics: the personal network survey. Four social capital variables are defined according to the tie strength and social distance between the respondent and his/her network members, resulting in four different social capital variables: (1) bonding (strong ties to persons of similar social standing); (2) bridging (weak ties to persons of similar social standing); (3) bonding link (strong ties to persons of higher social standing); and (4) bridging link (weak ties to persons of higher social standing). It has been found that bonding link social capital reduces the chances of being credit access-constrained. Political patronage or nepotism as the driving force behind the result is ruled out. Nevertheless, some evidence for elite capture was found.

Suggested Citation

  • Thomas Dufhues & Gertrud Buchenrieder & Nuchanata Munkung, 2013. "Social Capital and Market Imperfections: Accessing Formal Credit in Thailand," Oxford Development Studies, Taylor & Francis Journals, vol. 41(1), pages 54-75, March.
    • Handle: RePEc:taf:oxdevs:v:41:y:2013:i:1:p:54-75
    DOI: 10.1080/13600818.2012.753999
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    References listed on IDEAS

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    1. Fan, Shenggen & Jitsuchon, Somchai & Methakunnavut, Nuntaporn, 2004. "The importance of public investment for reducing rural poverty in middle-income countries: the case of Thailand," DSGD discussion papers 7, International Food Policy Research Institute (IFPRI).
    2. Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1.
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    Cited by:

    1. Allison Benson & Jean-Paul Faguet, 2023. "Increasing Access to Formal Agricultural Credit: The Role of Rural Producer Organisations," Journal of Development Studies, Taylor & Francis Journals, vol. 59(1), pages 21-38, January.
    2. Luminita Postelnicu & Niels Hermes, 2018. "Microfinance Performance and Social Capital: A Cross-Country Analysis," Journal of Business Ethics, Springer, vol. 153(2), pages 427-445, December.
    3. Luminita Postelnicu & Niels Hermes & Ariane Szafarz, 2014. "Defining Social Collateral in Microfinance Group Lending," Palgrave Studies in Impact Finance, in: Roy Mersland & R. Øystein Strøm (ed.), Microfinance Institutions, chapter 10, pages 187-207, Palgrave Macmillan.
    4. Chmelíková, Gabriela & Krauss, Annette & Dvouletý, Ondřej, 2019. "Performance of microfinance institutions in Europe—Does social capital matter?," Socio-Economic Planning Sciences, Elsevier, vol. 68(C).
    5. Ibrahim D. Raheem & Kazeem B. Ajide & Xuan V. Vo, 2021. "The hype of social capital in the finance‐growth nexus," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 50(3), November.
    6. Luminita Postelnicu & Niels Hermes & Roselia Servin Juarez, 2015. "Social Capital and the Repayment of Microfinance Group Lending. A Case Study of Pro Mujer Mexico," Working Papers CEB 15-023, ULB -- Universite Libre de Bruxelles.
    7. Li, Qinghai & Yu, Yangcheng & Li, Yanru & Sun, Guanglin, 2023. "Heterogeneous Social network shape ability and willingness of rural residents to repay loans in China," Research in International Business and Finance, Elsevier, vol. 65(C).
    8. Wahyudi & Achmad Nurmandi & Salahudin & Iradhad Taqwa Sihidi, 2021. "The Role of Social Capital in Handling Covid-19 at the Local Level in Indonesia," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 10, November.

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