Social Capital and Market Imperfections: Accessing Formal Credit in Thailand
Social capital matters in the economy. This study shows how different forms of individual social capital affect access to formal credit in rural Thailand. Social capital is defined as interpersonal network (ties) resources. A data collection approach is used that originates in the field of sociology and is innovative in the context of development economics: the personal network survey. Four social capital variables are defined according to the tie strength and social distance between the respondent and his/her network members, resulting in four different social capital variables: (1) bonding (strong ties to persons of similar social standing); (2) bridging (weak ties to persons of similar social standing); (3) bonding<sub>link</sub> (strong ties to persons of higher social standing); and (4) bridging<sub>link</sub> (weak ties to persons of higher social standing). It has been found that bonding<sub>link</sub> social capital reduces the chances of being credit access-constrained. Political patronage or nepotism as the driving force behind the result is ruled out. Nevertheless, some evidence for elite capture was found.
