Borrowing from “Pui” to Pay “Pom”

Multiple Borrowing and Over-Indebtedness in Rural Thailand

verfasst von

Bezawit Beyene Chichaibelu, Hermann Waibel

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.

Organisationseinheit(en)

Institut für Entwicklungs- und Agrarökonomik

Typ

Artikel

Journal

World Development

Band

98

Seiten

338-350

Anzahl der Seiten

13

ISSN

0305-750X

Publikationsdatum

10.2017

Publikationsstatus

Veröffentlicht

Peer-reviewed

Ja

ASJC Scopus Sachgebiete

Geografie, Planung und Entwicklung, Entwicklung, Soziologie und Politikwissenschaften, Volkswirtschaftslehre und Ökonometrie

Ziele für nachhaltige Entwicklung

SDG 8 – Anständige Arbeitsbedingungen und wirtschaftliches Wachstum

Elektronische Version(en)

https://doi.org/10.1016/j.worlddev.2017.04.032 (Zugang: Geschlossen)