R. Boonperm, JirawanHaughton, JonathanKhandker, ShahidurRukumnuaykit, Pungpond2012-03-192012-03-192012-03-01https://hdl.handle.net/10986/3286The 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.CC BY 3.0 IGOACCESS TO CREDITACCOUNTINGADMINISTRATIVE COSTADMINISTRATIVE COSTSADMINISTRATIVE EXPENSESAFFILIATED ORGANIZATIONSAGRICULTURAL COOPERATIVESAGRICULTUREASSET CLASSAVAILABILITY OF CREDITBALANCE SHEETBANK BORROWERSBANK LENDINGBANK LOANSBANKING SYSTEMBANKRUPTCYBANKRUPTCY CONSTRAINTBOOK VALUEBORROWERBORROWINGBORROWING COSTBORROWING COSTSBORROWING RATECAPITAL COSTSCAPITAL INFLOWCLAIMCOMMERCIAL BANKCONSUMER CREDITCREDIT ASSOCIATIONSCREDIT RATINGCREDIT RATINGSCREDIT STANDINGCREDITWORTHINESSDEBTDEMAND FOR CREDITDEPENDENTDEPOSITDEPOSITSDEVELOPMENT BANKDEVELOPMENT BANKSDEVELOPMENT POLICYDIVIDENDDIVIDEND PAYMENTSDIVIDENDSDUMMY VARIABLESECONOMETRIC MODELSECONOMIC SURVEYSEMERGENCY FUNDEMERGENCY LOANSENTREPRENEURSHIPEQUIPMENTEXCHANGE RATEEXPENDITUREEXPLICIT ­ INTERESTFINANCIAL ASSETFINANCIAL ASSETSFINANCIAL INFORMATIONFINANCIAL INSTITUTIONFINANCIAL INSTITUTIONSFINANCIAL INTERMEDIARIESFINANCIAL INTERMEDIARYFINANCIAL POSITIONGOVERNMENT SAVINGSHOLDINGINCOMEINCOME GROUPSINDEBTEDINSTRUMENTINSUFFICIENT FUNDSINTEREST COSTSINTEREST RATEINTEREST RATE POLICIESINTEREST RATESINTERNATIONAL BANKJUDGELATE PAYMENTSLENDERLENDERSLIABILITYLOANLOAN AMOUNTLOAN AMOUNTSLOAN APPLICATIONLOAN APPLICATIONSLOAN APPRAISALLOAN BALANCELOAN CONTRACTLOAN DEMANDLOAN GUARANTEESLOAN PORTFOLIOLOAN PRICELOAN RECOVERYLOAN REPAYMENTLOAN SIZELOAN SIZESLOAN TERMSLOANABLE FUNDSLOANS FROM BANKSLOANS TO INDIVIDUALSLOW INTEREST RATESMARGINAL PRODUCTMARGINAL UTILITYMARKET INTEREST RATEMICROCREDITMICROFINANCEMICROFINANCE INSTITUTIONSMONOPOLYNET PROFITNON-PERFORMING LOANSOFFERINGSONLENDINGOPPORTUNITY COSTOUTSTANDING DEBTOVERDUE LOANSPAYOFFPERSONAL LIABILITYPOOR BORROWERPOOR BORROWERSPRODUCTIVITYPROFIT MAXIMIZATIONPROFIT RATEPUBLIC FUNDSRECOVERY RATERECOVERY RATESREGRESSION ANALYSISREPAYMENTREPAYMENT OF PRINCIPALREPAYMENT PERIODREPAYMENT RATEREPAYMENT RATESREPAYMENTSRETURNREVOLVING FUNDRISKY BORROWERSROTATING CREDITSAVINGS BANKSAVINGS DEPOSITSSHAREHOLDERSSMALL LOANSMALL LOANSSOURCE OF CREDITSUPPLY OF CREDITWAGESWORKING CAPITALWorld Bank10.1596/1813-9450-5998