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The Impacts of Credit on Village Economies


Joseph P. Kaboski


Ohio State University (OSU) - Department of Economics

Robert M. Townsend


MIT - Department of Economics

April 9, 2009

MIT Department of Economics Working Paper No. 09-13

Abstract:     
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

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Date posted: April 30, 2009  

Suggested Citation

Kaboski, Joseph P. and Townsend, Robert M., The Impacts of Credit on Village Economies (April 9, 2009). MIT Department of Economics Working Paper No. 09-13. Available at SSRN: http://ssrn.com/abstract=1395348 or http://dx.doi.org/10.2139/ssrn.1395348

Contact Information

Joseph P. Kaboski
Ohio State University (OSU) - Department of Economics ( email )
Dept of Economics
Columbus, OH 43210-1172
United States
Robert M. Townsend (Contact Author)
MIT - Department of Economics ( email )
Bldg. E52-252c
50 Memorial Drive
Cambridge, MA 02142
United States
617-452-3722 (Phone)
617-253-1330 (Fax)
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