Loan Repayment Potential of Village Fund Members in Chiang Mai Province

Abstract

Village and community fund was established as a revolving fund within the village and community. The operation of the village fund could be succeeded only when the member could repay loan back on time. The study of loan repayment potential of the member of village fund hence  had its purpose to investigate the loan repayment of the member and the factors affecting loan repayment as well as problems for not be able to repay loan in Chiang Mai Province.    

The result showed that 56.7 percent of sample member had repayed loan back to the village fund once with interest.  The factors affecting loan repayment were wage earning, primary education, household income and interest rate. The problems of loan repayment included short time duration for repayment, amount of loan was not enough, high interest rate and complicated loan request process.

It was suggested that persons who got involved in village fund policy should pay special attention on 4 factors affecting loan repayment potential. The recommended interest rate was 6 percent per year. The village fund rule should also be improved in 2 aspects: extend time duration for repayment and increase amont of loan. Furthermore, the government should provide the officer to suggest the village fund member for they could have more opportunity to enhance their incomes  fund more effectively.