Access to capital in rural Thailand: An estimated model of formal vs. informal credit

Giné, Xavier

doi:10.1016/j.jdeveco.2010.07.001

Cited by 111 publications

(65 citation statements)

References 32 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Getting access to a credit may imply several trips and therefore infer high costs of transaction. For example, Giné (2010) estimates that the costs of transaction to have access to formal credit in Thailand may reach up to US $130. The informal credit market reduces the costs of transaction due to the geographical convenience between borrower and lender.…”

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

An Analysis of Social Proximity and Interest Rate in Rural South India

Bhukuth¹,

Ballet²,

Radja³

2018

Economics &Amp; Sociology

View full text Add to dashboard Cite

ABSTRACT. In this article we present the role of social proximity in the formation of the interest rate in the informal credit market in the state of Tamil Nadu, India. This paper is unique in the sense that it deals with social proximity and the formation of interest rate. If a lot of articles deal with the interest rate and social capital, none of them have attempted to link the two variables. A qualitative and quantitative survey was conducted on debt bondage in [2003][2004]. The impact of social proximity defined as strong and weak is captured by a simple regression model. We show that a strong social proximity has a negative impact on the interest rate. Furthermore, the frequency of transactions has a positive impact on the interest rate, which means that asymmetrical information does not play a central role in our study. We then explain the relation between social proximity and interest rate by using the concept of rights and obligations.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

“…The informal credit market reduces the costs of transaction due to the geographical convenience between borrower and lender. In the same study, Giné (2010) considers that nearly no transaction costs are implied on the informal market.…”

Section: Literature Reviewmentioning

confidence: 99%

An Analysis of Social Proximity and Interest Rate in Rural South India

Bhukuth¹,

Ballet²,

Radja³

2018

Economics &Amp; Sociology

View full text Add to dashboard Cite

show abstract

“…In China, for example, more than 67% of farm households borrow from friends and relatives (Turvey and Kong, 2010), as these informal lenders are accessible "at no cost" (Gine, 2011) other than maintaining a social network (Banerjee et al, 2015). Other sources of informal credit are moneylenders, trade credit, and rotating savings and credit associations (ROSCAs; see e.g.…”

Section: Literature Reviewmentioning

confidence: 99%

Microfinance for poverty alleviation: Do transnational initiatives overlook fundamental questions of competition and intermediation?

Arp¹,

Ardisa²,

Ardisa³

2017

Transnational Corporations

View full text Add to dashboard Cite

Numerous microfinance initiatives around the world aim to alleviate poverty in developing countries. However, debate persists about their effectiveness and sustainability -a concern for transnational corporations and the international business community, which contribute about $9.4 billion to microfinance funding. In this policy-oriented article we aggregate findings from two studies in Indonesia that help explain why moneylending can still thrive when low-interest microfinance is widely available and why the poorest borrowers benefit less than the less-poor. To avoid methodological debates about validity, we interview market participants and triangulate the perspectives of borrowers with those of formal and informal lenders. Importantly, our research includes current and past borrowing from formal and informal sources, prompting participants to draw comparisons. We find that the importance to borrowers of key characteristics of informal lending is insufficiently recognized and that inappropriate human resource management and informal intermediation are significant problems. The latter can be an unintended consequence of formal microfinance: The availability of formal low-interest microfinance creates informal intermediation opportunities for entrepreneurs, often developing from casual intermediation into systematic deception. We discuss implications for microfinance policy with reference to the United Nations Sustainable Development Goals and offer suggestions for further research.

show abstract

“…Collateral security requirement could have played a vital role in bringing about incentives for borrowers to invest in high-yielding activities. Giné (2011) suggested that enforcement of private contracts and the registration of property seem to be much more effective in improving credit access for the formal sector in Thailand. Also, credit recipients appear to use credit for financing nonfarm activities, which could be more profitable and prone to fewer risks.…”

Section: After Matchingmentioning

confidence: 99%

Is Access to Agribank Credit an Effective Tool in Improving Household Income? Evidence from the Northern Mountainous Region of Vietnam

Luan¹,

Vu²,

Huong³

et al. 2016

ASS

View full text Add to dashboard Cite

Access to credit has been thought to be a key factor in rural development and poverty reduction. In Vietnam, the Vietnam Bank for Agriculture and Rural Development (Agribank) emerged from the mono-tier banking system in 1988 and performs as a profit-oriented commercial bank sustaining the development of rural areas. During the last two decades, the bank has clearly expanded its share of credit outstanding in total rural credit market volume and this process is in line with the trending development of the national economy. The aim of this study is to examine whether Agribank credit improves household income in the Northern Mountains of Vietnam, where the poor and ethnic minorities are overrepresented in the population. In order to create robust estimates, a joint consideration of all four matching algorithms (nearest-neighbor matching, radius matching, Kernel matching and stratification matching) is applied to the Propensity Score Matching. The study found that access to extension services, ethnicity, and total savings emerged as reliable predictors of credit access among household endowments. Loan volumes increase with total value of household assets. In addition, the impact of credit lies in the range increase of 14.56% to 43.78% of total income, 12.09% to 51.83% of per capita income and 43.64% to 111.60% of nonfarm income of household with credit access. The agricultural bank credit has contributed in improving household income in the Northern Mountains of Vietnam. Results in this study provide further support for the hypothesis that the remarkable progress in poverty reduction in the last two decades in Vietnam is partly attributed to the development of Agribank credit. Experiences of the Agribank in lending to rural areas could be worthwhile for intermediary financial institutions to support rural development in Vietnam.

show abstract

Access to capital in rural Thailand: An estimated model of formal vs. informal credit

Cited by 111 publications

References 32 publications

An Analysis of Social Proximity and Interest Rate in Rural South India

An Analysis of Social Proximity and Interest Rate in Rural South India

Microfinance for poverty alleviation: Do transnational initiatives overlook fundamental questions of competition and intermediation?

Is Access to Agribank Credit an Effective Tool in Improving Household Income? Evidence from the Northern Mountainous Region of Vietnam

Contact Info

Product

Resources

About