The Impact of Credit on Village Economies

Joseph Kaboski and Robert Townsend

American Economic Journal: Applied Economics, 2012, vol. 4, issue 2, 98-133

Abstract: This paper evaluates the short- and longer term impact of Thailand's "Million Baht Village Fund" program, among the largest scale government microfinance iniatives 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, and 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. (JEL D14, G21, O12, O16, O18)

JEL-codes: D14 G21 O12 O16 O18 (search for similar items in EconPapers)
Date: 2012
Note: DOI: 10.1257/app.4.2.98
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Citations: View citations in EconPapers (109)

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