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Microcredit on a Large Scale: Appraising the Thailand Village Fund

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  • Jonathan Haughton
  • Shahidur R. Khandker
  • Pungpond Rukumnuaykit

Abstract

type="main"> The Thailand village fund (VF) is the second-largest microcredit scheme in the world. Nearly 80 000 elected local VF committees administer loans that reach 30 percent of all households. The value of VF loans has remained steady since 2006, even without new infusions of government funds, and loans go disproportionately to the poor. Based mainly on a custom-built survey of over 3000 local VFs conducted in 2010, we evaluate the performance of the VF. As expected, profit rates are hard to model, but our regression analysis shows that loan recovery rates, total lending and the proportion of loans going to the poor are all higher when a VF borrows additional funds from a formal bank and on-lends to households, as done by one in five VFs. An economic analysis suggests, tentatively, that VF benefits exceed the costs. A financial analysis shows that VFs more than break even, with receipts covering their cash costs. Most VFs are social rather than financial intermediaries; they have little incentive to take risks or to innovate, which explains why VF lending has not kept pace with the growth of the Thai economy.

Suggested Citation

  • Jonathan Haughton & Shahidur R. Khandker & Pungpond Rukumnuaykit, 2014. "Microcredit on a Large Scale: Appraising the Thailand Village Fund," Asian Economic Journal, East Asian Economic Association, vol. 28(4), pages 363-388, December.
    • Handle: RePEc:bla:asiaec:v:28:y:2014:i:4:p:363-388
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    References listed on IDEAS

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    Cited by:

    1. Diego Vera-Cossio, 2022. "Targeting Credit through Community Members," Journal of the European Economic Association, European Economic Association, vol. 20(2), pages 778-821.
    2. Niels Hermes & Marek Hudon, 2018. "Determinants Of The Performance Of Microfinance Institutions: A Systematic Review," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1483-1513, December.
    3. Haughton, Jonathon & Khandker, Shahidur R., 2016. "Microcredit in Viet Nam: Does it matter?," IFPRI discussion papers 1569, International Food Policy Research Institute (IFPRI).
    4. Hermes, Cornelis & Hudon, M., 2018. "Determinants of the Performance of Microfinance Institutions: A Systematic Review," Research Report 2018008, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

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