Details
| Original language | English |
|---|---|
| Pages (from-to) | 338-350 |
| Number of pages | 13 |
| Journal | World Development |
| Volume | 98 |
| Early online date | 26 May 2017 |
| Publication status | Published - Oct 2017 |
Abstract
Rural financial markets have grown rapidly in Asian emerging market economies, thus contributing to economic development and the reduction of poverty. At the same time, however, the level of indebtedness of rural households has increased, making households more vulnerable to shocks. One of the reasons for rising household debt is the ease of borrowing simultaneously from a growing number of lending institutions. This paper addresses two major questions. First, does borrowing from multiple sources increase rural households’ risk of over-indebtedness? Second, do over-indebted rural households refinance their outstanding loans through multiple borrowing, running the risk of becoming trapped in a debt cycle? Employing a dynamic random effects bivariate probit model for a unique set of longitudinal household panel data from Northeast Thailand, this study examines the bidirectional relationship between over-indebtedness and multiple borrowing to determine to what extent rural households become trapped in debt cycles. On the one hand, the results indicate that households in Northeast Thailand take on multiple loans, which further increases their risk of becoming over-indebted. On the other hand, our model results do not confirm the widespread notion that over-indebted rural households use multiple loans to refinance unpayable debts.
Keywords
- dynamic random effect bivariate probit model, household over-indebtedness, microcredit, multiple borrowing, Thailand
ASJC Scopus subject areas
- Social Sciences(all)
- Geography, Planning and Development
- Social Sciences(all)
- Development
- Social Sciences(all)
- Sociology and Political Science
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
Sustainable Development Goals
Cite this
- Standard
- Harvard
- Apa
- Vancouver
- BibTeX
- RIS
In: World Development, Vol. 98, 10.2017, p. 338-350.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Borrowing from “Pui” to Pay “Pom”
T2 - Multiple Borrowing and Over-Indebtedness in Rural Thailand
AU - Chichaibelu, Bezawit Beyene
AU - Waibel, Hermann
N1 - Publisher Copyright: © 2017 Elsevier Ltd Copyright: Copyright 2017 Elsevier B.V., All rights reserved.
PY - 2017/10
Y1 - 2017/10
N2 - Rural financial markets have grown rapidly in Asian emerging market economies, thus contributing to economic development and the reduction of poverty. At the same time, however, the level of indebtedness of rural households has increased, making households more vulnerable to shocks. One of the reasons for rising household debt is the ease of borrowing simultaneously from a growing number of lending institutions. This paper addresses two major questions. First, does borrowing from multiple sources increase rural households’ risk of over-indebtedness? Second, do over-indebted rural households refinance their outstanding loans through multiple borrowing, running the risk of becoming trapped in a debt cycle? Employing a dynamic random effects bivariate probit model for a unique set of longitudinal household panel data from Northeast Thailand, this study examines the bidirectional relationship between over-indebtedness and multiple borrowing to determine to what extent rural households become trapped in debt cycles. On the one hand, the results indicate that households in Northeast Thailand take on multiple loans, which further increases their risk of becoming over-indebted. On the other hand, our model results do not confirm the widespread notion that over-indebted rural households use multiple loans to refinance unpayable debts.
AB - Rural financial markets have grown rapidly in Asian emerging market economies, thus contributing to economic development and the reduction of poverty. At the same time, however, the level of indebtedness of rural households has increased, making households more vulnerable to shocks. One of the reasons for rising household debt is the ease of borrowing simultaneously from a growing number of lending institutions. This paper addresses two major questions. First, does borrowing from multiple sources increase rural households’ risk of over-indebtedness? Second, do over-indebted rural households refinance their outstanding loans through multiple borrowing, running the risk of becoming trapped in a debt cycle? Employing a dynamic random effects bivariate probit model for a unique set of longitudinal household panel data from Northeast Thailand, this study examines the bidirectional relationship between over-indebtedness and multiple borrowing to determine to what extent rural households become trapped in debt cycles. On the one hand, the results indicate that households in Northeast Thailand take on multiple loans, which further increases their risk of becoming over-indebted. On the other hand, our model results do not confirm the widespread notion that over-indebted rural households use multiple loans to refinance unpayable debts.
KW - dynamic random effect bivariate probit model
KW - household over-indebtedness
KW - microcredit
KW - multiple borrowing
KW - Thailand
UR - http://www.scopus.com/inward/record.url?scp=85019850526&partnerID=8YFLogxK
U2 - 10.1016/j.worlddev.2017.04.032
DO - 10.1016/j.worlddev.2017.04.032
M3 - Article
AN - SCOPUS:85019850526
VL - 98
SP - 338
EP - 350
JO - World Development
JF - World Development
SN - 0305-750X
ER -