Why are Informal Loans Still a Big Deal? Evidence from North-east Thailand

Carmen Kislat

Journal of Development Studies, 2015, vol. 51, issue 5, 569-585

Abstract: This article examines the use and benefit of informal loans for different income groups of rural households in north-east Thailand. Using a difference-in-differences estimation approach, which is later complemented by propensity score matching, the article shows that different household groups profit from informal loans in different ways. Poor households increase their asset endowment, and in particular farming assets, whereas rich households' (food) consumption rises, especially if households borrow due to a shock. By showing that informal loans serve different households for different purposes, this article provides an explanation why they still play an important role.

Date: 2015
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DOI: 10.1080/00220388.2014.983907

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