Access to Capital in Rural Thailand: An Estimated Model of Formal vs Informal Credit
This paper analyzes the mechanism underlying access to credit, focusing on two important aspects of rural credit markets. First, moneylenders and other informal lenders coexist with formal lending institutions such as government or commercial banks, and, more recently, micro-lending institutions. Second, potential borrowers presumably face sizable transaction costs in obtaining external credit. We develop and estimate a model based on limited enforcement and transaction costs that provides a unified view of these facts. Based on data from Thailand, the results show that the limited ability of banks to enforce contracts, more than transaction costs, is crucial in understanding the observed diversity of lenders.
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| Main Author: | |
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| Format: | Journal Article biblioteca |
| Language: | EN |
| Published: |
2011
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| Subjects: | Banks, Other Depository Institutions, Micro Finance Institutions, Mortgages G210, Economic Development: Financial Markets, Saving and Capital Investment, Corporate Finance and Governance O160, Economic Development: Regional, Urban, and Rural Analyses, Transportation O180, |
| Online Access: | http://hdl.handle.net/10986/5777 |
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