Impact of microfinance programs in Thailand

Wittawat Hemtanon and Christopher Gan

Agricultural Finance Review, 2021, vol. 81, issue 5, 702-718

Abstract: Purpose - The purpose of this paper is to analyze the impact of microfinance programs on the income and food expenditure of farm and nonfarm households in Thailand. Design/methodology/approach - The study employs secondary data from the Thai Socioeconomic Survey (cross-sectional data from 2017 and panel data from 2012 to 2017). The cross-sectional data (2017) include 43,210 households. Panel data from the 2012 and 2017 Socioeconomic surveys (SES surveys) include 4,406 households. The estimation methods include propensity score matching (PSM) and a fixed effect (FE) model. Findings - The result shows that village funds (VFs) have a significant negative impact on income and food expenditure for both farm and nonfarm households. The empirical results reveal that the saving groups for production (SGPs) effects are positively significant in terms of income and food expenditure, but only for farm households. The FE model result also shows that while VFs have a negative impact on income they have a positive impact on food expenditure for farm households. In contrast, SPGs have no impact on both farm and nonfarm households' income and food expenditure. Practical implications - Farm and nonfarm households require both welfare and microfinance programs. Microfinance programs can only help these households once they have the necessary education. The government should provide social programs and business skills for these households; completion of these courses should be a pre-requisite for accessing microfinance programs. Originality/value - This study is unique because it reveals the microfinance impact between VFs and SGPs programs so that most low-income and poor people in Thailand can access basic financial services.

Keywords: Poverty; Microfinance impact; Village funds; Saving groups (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afrpps:afr-02-2020-0026

DOI: 10.1108/AFR-02-2020-0026

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