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The Impacts of Credit on Village Economies

July 19, 2012 Comments off

The Impacts of Credit on Village Economies

Source:  Consortium on Financial Systems and Poverty
This paper evaluates the short-term impact of Thailand’s Million Baht Village Fund program, among the largest scale government microfinance initiative in the world, using pre- and postprogram 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, 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.

See: Notre Dame, MIT economists demonstrate wage impacts of large microfinance program (EurekAlert!)

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