Impacts of Savings Groups Programs on Household Welfare in Laos: Case Study of the Vientiane Vicinity during the Mid-2000s (<Special Issue> Savings Groups in Laos from a Comparative Perspective)

Abstract

Based on original household survey on the six villages in Vientiane vicinity in 2005, the paper investigates the impact of Savings Groups (SGs) programs on household income, expenditure, and asset, applying the methodology of Coleman's (1999) study on Thailand to address placement bias and endogeneity problem. The results revealed that SGs programs brought certain changes; SGs boosted educational expenditures implying activation of human capital formation, increased the house asset suggesting villagers' investment reflected by possible business activation, and brought a possible shift in income sources from traditional agriculture to livestock raising. The paper interprets these different results from Coleman (ibid.) in two pos-sible ways; First the Laotian case is to an extent, free from a bias associated with seed capital allocation, therefore is more suitable to capture the effect than Thailand, and second it is since the stage of financial accessibility in Laos is far less developed than in Thailand.