A Structural Evaluation of a Large-Scale Quasi-Experimental Microfinance Initiative
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Townsend_A structural.pdf
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Author(s)
Kaboski, Joseph P.
Townsend, Robert
Date Issued
April 2010
Journal
Econometrica
Publisher
Econometric Society
Citation
Kaboski, Joseph P. and Robert M. Townsend. "A Structural Evaluation of a Large-Scale Quasi-Experimental Microfinance Initiative." Econometrica, Vol.79, No.5 (September, 2011), 1357–1406.
Version
Author's final manuscript
Abstract
This paper uses a structural model to understand, predict, and evaluate the impact
of an exogenous microcredit intervention program, the ThaiMillion Baht Village Fund
program. We model household decisions in the face of borrowing constraints, income
uncertainty, and high-yield indivisible investment opportunities. After estimation of
parameters using pre-program data, we evaluate the model’s ability to predict and
interpret the impact of the village fund intervention. Simulations from the model
mirror the data in yielding a greater increase in consumption than credit, which is
interpreted as evidence of credit constraints. A cost-benefit analysis using the model
indicates that some households value the program much more than its per household
cost, but overall the program costs 20 percent more than the sum of these benefits.
MIT Department
Massachusetts Institute of Technology. Department of Economics
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Creative Commons Attribution-Noncommercial-Share Alike 3.0
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DOI of Published Version
http://dx.doi.org/10.3982/ECTA7079
https://doi.org/10.3982/ECTA7079
