The Impacts of Credit on Village Economies
46 Pages Posted: 30 Apr 2009
Date Written: April 9, 2009
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.
Keywords: microfinance, finance and growth, credit constraints
JEL Classification: O1, E2
Suggested Citation: Suggested Citation