Microfinance Trust Factor: A Village Fund Case in Thailand

Abstract

This paper presents the findings related to trust factor impact of Village and Urban Community Fund (VCF) program on the members of Ton-ked rural community in Prachuabkirikan province of Thailand. The study was not based on a predetermined set of criteria, but was based on what the members have experienced as a result of the program participation. Members of the village fund were invited to a gathering to participate in this study and nine agreed statements describing the impact of the program were derived. Although the result shows that the impacts perceived by the participants were investment return, household spending, knowledge as can be expected from most microfinance program, it is evidenced that trust, unity, biasness, payback in-confidence, fear of not getting a second round loan, and sacrifice were perceived by the participants. Since different communities have different nature and characteristics, uniqueness of the environment and impacts in each community should be acknowledged in the assessment. Exploratory Factor Analysis was used to determine the factors of perceived impacts and the trust factor and the non-trust factor were derived. This paper raises the point that microfinance impact assessment criteria related to the trust factor should be explored. Trust factor is significant in the assessment of a microfinance program such as VCF as it contributes to the understanding of cooperation and self-governance ability of the people that is pertinent to the sustainability of microfinance institutions.