Trends of rural-finance-market research and various issues of the rural financesystem in Thailand

摘要

This paper presents a review of the theory of rural finance research in developing countries and tries to clarify the viewpoint of analysis of rural finance system in Thailand. It is widely recognized in developing countries that small-scale farmers with limited accumulation of capital cannot attain modernization of their production. Therefore,governments in developing countries began establishing financial institutions to pour funds into rural financial markets to overcome this market failure. However, there were few successful cases in the 1970s. For this reason, in the 1980s, market forces were emphasized, based upon the neo-classical economic theory of not relying ongovernment intervention in rural finance markets. Whereas it is important to use market forces in order to operate rural finance markets effectively, the approach based upon new-institutional economic theory began receivingattention in 1990s. In other words, it is now clear that relying solely on market forces is not enough due to fact that asymmetric information between lenders and borrowers causes transaction costs to rise, which affects rural finance markets ineffectively. Thus, it is necessary for governments to intervene in rural finance markets to reduce transaction costs. Accordingly, the rural finance system in Thailand should be examined from two viewpointsbased upon new-institutional economic theory. In this paper, we discuss these two main points. The first point focuses on establishing sustainable financial institutions in a self-reliant manner. The second point focuses onmanaging financial institutions effectively.