Creditworthiness and Governance of Thai Microfinance


รศ.ดร.สันติ ถิรพัฒน์


2020 WEI Vienna International Academic Conference on Business & Economics, Management and Finance


Understanding the role of governance in microfinance is important in economic development. In general, it should be expected that there is positive association between governance structure and creditworthiness, measured by the repayment rate, of these funds. Using the unique survey data set, this study examines the impacts of governance on the creditworthiness of two distinct types of microfinance institutions in Thailand, the National Village and Urban Community Funds (Village Funds) and Saving Groups for Agricultural Production (Saving Groups). The former is promoted and supported by the government policy while the later initiated by the community. Based on the sample of 5,669 village funds and 11,197 saving groups, the results of ordinal probit regression show that the impacts of governance are not according to common believes for the village funds. For these funds, most of governance variables have the opposite expected impacts on the repayment. But on the contrary, there is positive association of governance and creditworthiness for the Saving Groups. Moreover, the test based on the receiver operating characteristic (ROC) shows that the governance variables improve the performance of the prediction model only in the case saving groups. Overall, the study suggests that traditional governance mechanisms may not be effective for institutions with certain political agenda. Designing the effective governance structure is a complex and dynamic system that involves the interaction of diverse set of constituents. Although there are certain limitations of data, the study can be helpful in providing a basis for more rigorous study in the future.

Creditworthiness and Governance of Thai Microfinance. ONLINE Conference, 2020 WEI Vienna International Academic Conference on Business & Economics, Management and Finance (33-65).