Appraising the Thailand Village Fund
The Thailand Village Fund is the second-largest microcredit scheme in the world. Nearly 80,000 elected local Village Fund committees administer loans that reach 30 percent of all households. The value of Village Fund loans has remained steady since...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120314093820 http://hdl.handle.net/10986/3286 |
| Summary: | The Thailand Village Fund is the
second-largest microcredit scheme in the world. Nearly
80,000 elected local Village Fund committees administer
loans that reach 30 percent of all households. The value of
Village Fund loans has remained steady since 2006, even
without new infusions of government funds, and loans go
disproportionately to the poor. Based mainly on a
custom-built survey of more than 3,000 Village Funds
conducted in 2010, this paper evaluates the performance of
Village Funds, which it argues are best modeled as
altruistic, and do not appear to be subject to elite
capture. As expected, profit rates are difficult to model,
but the regression analysis shows that loan recovery rates,
total lending, credit ratings, and the proportion of loans
going to the poor are all higher when a Village Fund borrows
additional funds from a formal bank and on-lends to
households, as was done by one in five Village Funds. An
economic analysis suggests that Village Fund benefits exceed
the costs. Most Village Funds are social rather than
financial intermediaries; they have little incentive to take
risks or to innovate, which explains why Village Fund
lending has not kept pace with the growth of the Thai economy. |
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