Determinants of the Household Debts in Rural Areas

Abstract

The household debt in Thailand has grown rapidly for the last decade. Rising household debt can contribute to not only household financial fragility, but also negative economic and financial sector outcomes in the long run. This paper aims to investigate factors influencing household loan decision using the survey of the 256 individuals. The findings demonstrate that factors impacting household loan decisions differ across farm and non-farm households. Non-farm households are likely to have a higher debt burden when their income increases, however, household income has no significantly impact on debt level in non-farm household. Poor farming households are less likely to have household debt, however, this study finds no significantly different on non-farm household debt between poor households and non-poor households. Therefore, analyzing data without distinguishing between farm and non-farm households might provide the incorrect message. Additionally, while increased debt may not always indicate a negative effect on housesholds, it is important to look into household debt and default at the same time.