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Does the Village Fund matter in Thailand? Evaluating the impact on incomes and spending

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  • Boonperm, Jirawan
  • Haughton, Jonathan
  • Khandker, Shahidur R.

Abstract

Launched in 2001, the Thailand Village and Urban Community Fund (VF) provided almost US$2billion – a million baht for each of Thailand's 78,000 villages and wards – to provide working capital for locally-run rotating credit associations. Using data from the Thailand Socioeconomic Surveys of 2002 and 2004, we find that VF borrowers were disproportionately poor and agricultural. A fixed effects model using a panel of rural households for these years finds that VF borrowing is associated with, on average, 3.5% more current spending, and 1.4% more income; very similar impacts are found using a propensity score matching model applied to nationwide data in 2004, which also found that VF loans are associated with the acquisition of more durable goods. By way of contrast, borrowing from the Bank for Agriculture and Agricultural Cooperatives appears to have a stronger effect on income than on expenditures. The evidence also shows that the effect on expenditure (or income) of VF borrowing is strongest at the lower quantiles, and flowed disproportionately to low-income households; in both of these senses it is “pro-poor”.

Suggested Citation

  • Boonperm, Jirawan & Haughton, Jonathan & Khandker, Shahidur R., 2013. "Does the Village Fund matter in Thailand? Evaluating the impact on incomes and spending," Journal of Asian Economics, Elsevier, vol. 25(C), pages 3-16.
    • Handle: RePEc:eee:asieco:v:25:y:2013:i:c:p:3-16
    DOI: 10.1016/j.asieco.2013.01.001
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    References listed on IDEAS

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    3. Islam, Asadul, 2015. "Heterogeneous effects of microcredit: Evidence from large-scale programs in Bangladesh," Journal of Asian Economics, Elsevier, vol. 37(C), pages 48-58.
    4. Paulina Permatasari & Assyifa Szami Ilman & Carol Ann Tilt & Dian Lestari & Saiful Islam & Rita Helbra Tenrini & Arif Budi Rahman & Agunan Paulus Samosir & Irwanda Wisnu Wardhana, 2021. "The Village Fund Program in Indonesia: Measuring the Effectiveness and Alignment to Sustainable Development Goals," Sustainability, MDPI, vol. 13(21), pages 1-30, November.
    5. Alessandra Amendola & Marinella Boccia & Gianluca Mele & Luca Sensini, 2017. "An Assessment of the Access to Credit-Welfare Nexus: Evidence from Mauritania," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(9), pages 1-77, August.
    6. Amendola,Alessandra & Boccia,Marinella & Mele,Gianluca & Sensini,Luca, 2016. "Financial access and household welfare : evidence from Mauritania," Policy Research Working Paper Series 7533, The World Bank.
    7. Habimana, Dominique & Haughton, Jonathan, 2022. "Does Rwanda’s flagship microcredit programme boost agriculture and incomes?," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 17(3), September.
    8. Fan Wang, 2022. "An Empirical Equilibrium Model of Formal and Informal Credit Markets in Developing Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 46, pages 224-243, October.
    9. Wittawat Hemtanon & Christopher Gan, 2020. "Microfinance Participation in Thailand," JRFM, MDPI, vol. 13(6), pages 1-27, June.
    10. Haughton, Jonathon & Khandker, Shahidur R., 2016. "Microcredit in Viet Nam: Does it matter?:," IFPRI discussion papers 1569, International Food Policy Research Institute (IFPRI).
    11. Kifayat Ullah & Abdul Qayyum Mohsin & Abdul Saboor & Saranjam Baig, 2020. "Financial Inclusion, Socioeconomic Disaster Risks and Sustainable Mountain Development: Empirical Evidence from the Karakoram Valleys of Pakistan," Sustainability, MDPI, vol. 12(22), pages 1-26, November.

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