Impacts of Savings and Credit Union Programs on Household Welfare in Laos: Case Study of the Vientiane Vicinity during the mid-2000s

Based on original household survey on the six villages in Vientiane vicinity in 2005, the paper investigates the impact of Savings and Credit Union (SCU) 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 SCU programs brought certain changes; SCUs 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 results different from Coleman's (1999) in two possible 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.