Financial Markets for Small Enterprises in Urban and Rural Northern Thailand

This study examines the demand for and supply of financial services for small entrepreneurs in Northern Thailand. Particular emphasis is placed on credit technologies deployed by formal and informal institutions and on determinants of credit access and borrower transaction costs. The study complements and expands on existing research into micro-finance by adding a specific regional dimension. A remarkable situation of «urban bias in reverse» has been detected as far as access to formal finance is concerned. Conventional access variables (such as education and the level of household income and assets) do not explain rural households' access to institutional credit sources, while these factors turned out to be powerful determinants in explaning urban households' access to formal finance. This can be explained by the efforts on the part of the Thai government to improve access to credit for small rural enterprises. The author concludes that the neglect of rural finance and the lack of innovative financial approaches is, to a significant extent, also the result of political priority-setting and decision-making; it cannot be attributed to unattractive investment possibilities alone.

Autorentext

The Author: Wolfram Erhardt, born in Tübingen, 1969, studied Business and Economics at the University of Hohenheim with specialisation in International Economics, Banking and Accounting. His dissertation was completed in 2001. Presently he is project manager for Southeast Europe at Kreditanstalt für Wiederaufbau in Frankfurt am Main.

Inhalt
Contents: Introduction Definitions and Methodology Northern Thailand - The Socio-Economic and Regional Context Finance Technologies of Lenders in Urban and Rural Chiang Mai Access of Urban and Rural Small Enterprise Households to Formal Credit Borrower Transaction Costs of Urban and Rural Small Entrepreneurs Summary and Policy Conclusions.