American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
The Impact of Credit on Village Economies
American Economic Journal: Applied Economics
vol. 4,
no. 2, April 2012
(pp. 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)Citation
Kaboski, Joseph P., and Robert M. Townsend. 2012. "The Impact of Credit on Village Economies." American Economic Journal: Applied Economics, 4 (2): 98–133. DOI: 10.1257/app.4.2.98Additional Materials
JEL Classification
- D14 Personal Finance
- G21 Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- O12 Microeconomic Analyses of Economic Development
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
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