Chapter 5: Microfinance System in Thailand

Microfinance has been widely discussed as one of the rural development initiatives to distribute credit and financial services to the rural poor in Thailand since the mid-1970s. In 2013, approximately 67.2% of the country’s 7.3 million poor resided in the rural areas and nearly half of them lived in north-east region. Most of the poor are smallholder farmers who experience poverty and live below the basic standard of living. Thus, they require to access credit to invest in their farming businesses and for household consumption. The demand for short-term credit plays an important role in the rural households’ borrowing that is predominantly supplied by the informal lenders. However, during the past few decades, the proportion of credit from formal financial institutions have grown dramatically to substitute the informal credit in the rural areas. This chapter presents an overview of microfinance in Thailand including the types and characteristics.