The Impact of Credit on Village Economies
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Townsend_The Impact.pdf
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1.2 MB
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Author(s)
Townsend, Robert
Kaboski, Joseph P.
Date Issued
April 2012
Journal
American Economic Journal: Applied Economics
Publisher
American Economic Association
Citation
Kaboski, Joseph P, and Robert M Townsend. “The Impact of Credit on Village Economies.” American Economic Journal: Applied Economics 4.2 (2012): 98–133. © 2012 AEA
Version
Final published version
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)
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/app.4.2.98
