The Impacts of Credit on Village Economies
Joseph P. Kaboski
Ohio State University (OSU) - Economics
Robert M. Townsend
MIT - Department of Economics
April 9, 2009
MIT Department of Economics Working Paper No. 09-13
This paper evaluates the short-term impact of Thailand's 'Million Baht Village Fund' program, among the largest scale government microfinance initiatives in the world, using pre-and post-program panel data and quasi-experimental cross-village variation in credit-per-household. We find that the village funds have increased total short-term credit, consumption, agricultural investment, income growth (from business and labor), but decreased overall asset growth. We also find a positive impact on wages, an important general equilibrium effect. The findings are broadly consistent qualitatively with models of credit-constrained household behavior and models of intermediation and growth.
Number of Pages in PDF File: 46
Keywords: microfinance, finance and growth, credit constraints
JEL Classification: O1, E2
Date posted: April 30, 2009
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