Village Funds and Access to Finance in Rural Thailand

The paper analyzes the contribution of village funds to rural credit markets, and includes household survey in three provinces of north east Thailand. It assesses the role of village funds in easing credit constraints faced by rural households.The paper discusses Thailand's rural credit market, presenting descriptive statistics about village funds in relation to other financial institutions. It also discusses regression approaches analyzing contribution of the village funds and the resulting policy considerations. Study findings indicate that village funds:

• Reach target group of households with a lower socio-economic status to a higher degree than competing institutions from the formal sector;
• Provide loans to more typical consumers of informal financial institutions;
• Help reduce credit constraints.

In conclusion, the paper states that the program improved access to finance, but not to the expected degree. This raises questions about its efficiency.