2007b), ”Testing a Structural Model of Credit Constraints Using a Large-Scale Quasi-Experimental Microfinance Inititiative” working paper

This paper develops a structural model of credit constrained household consump-tion, indivisible investment, and savings behavior, and tests the model using a major government microfinance program as an exogenous quasi-experimental injection of credit. After estimation of parameters using pre-program data, the estimated model is evaluated using the Thai Million Baht Village Fund Program. Simulated predic-tions from the model mirror actual data in reproducing a greater increase in consump-tion than credit, which is interpreted as evidence of credit contraints. A cost-benefit analysis using the model indicates that the program costs just 66 percent of a transfer program providing an equivalent benefit