Impacts of microfinance programs in Thailand
2019
Hemtanon, W | Gan, Christopher | Elsawah, S
Thailand has been developing its economy based on national and social-development plans over the last six decades. These plans focus on economic growth by supporting the manufacturing industry in order to export products to other countries. As a result, the growth rate performance has been outstanding since the late 1950s. Moreover, the Thai economy had been one of the fastest-growing economies in the world, and the GDP grew 10 per cent per year in the 1990s (Warr, 2000). Poverty incidence has thus declined dramatically. However, income inequality is still a big problem in Thailand. TDRI (2004) and Bird, et al. (2011) suggest that microfinance can assist to reduce income inequality among the poor. Under the Thailand National Economic and Social Development Plan (NESDP), microfinance institutions (MFIs) are considered to play an important role to enable poor people to equally access financial resources and new financial products at reasonable cost (Tambunlertchai, 2015). This paper evaluates the impacts of microfinance programs on economic and social welfare of households in Thailand. The study employs secondary data from the Socioeconomic Survey (cross-sectional data in 2017 and panel data in 2012 and 2017) to evaluate the impact of the MFIs. The estimation methods include propensity score matching (PSM) and a fixed effect (FE) model. The result shows the impacts of Village Funds (VFs) are significant in terms of income and expenditure but not on housing, food, and medical expenditures. However, the impacts of VFs are negative. In terms of Saving Groups for Production (SGPs), the empirical results reveal that SGPs effects are significant in income but insignificant in expenditure. The FE model result also shows that VF impacts only education expenditure, but impacts on income and transport expenditure of SGPs.
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