Does the Village Fund Matter in Thailand?

36 Pages Posted: 20 Apr 2016

See all articles by Jirawan Boonperm

Jirawan Boonperm

affiliation not provided to SSRN

Jonathan Haughton

Suffolk University - Department of Economics

Shahidur R. Khandker

World Bank - Development Research Group (DECRG)

Date Written: July 1, 2009

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.

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

Suggested Citation

Boonperm, Jirawan and Haughton, Jonathan H. and Khandker, Shahidur R., Does the Village Fund Matter in Thailand? (July 1, 2009). World Bank Policy Research Working Paper No. 5011, Available at SSRN: https://ssrn.com/abstract=1437963

Jirawan Boonperm (Contact Author)

affiliation not provided to SSRN

No Address Available

Jonathan H. Haughton

Suffolk University - Department of Economics ( email )

8 Ashburton Place
Boston, MA 02108
United States
617-641-4852 (Fax)

Shahidur R. Khandker

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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