Do Agricultural Debt Moratoriums Help or Hurt? The Heterogenous Impacts on Rural Households in Thailand

Majority of Thai agricultural households have been at risk of trapping in persistent debt problems, which could in turn impede their development prospects. Over the past decade, debt moratoriums have been one of the most extensive policies aiming to help Thai agricultural households – resulting in 44.1% of households being in debt moratoriums for more than 4 years. This paper estimates the impacts of agricultural debt moratoriums on households' debt, saving and agricultural investment dynamics using a unique panel data of 1 million representative households nationwide. We found that while the debt moratoriums could decrease delinquency propensity in the short run, they significantly resulted in higher debt accumulation, especially among those with larger debt and those with higher program intensity. The moratoriums had no significant impact on saving, while could increase agricultural investment especially among those with smaller debt. The findings imply that design of Thailand's popular debt moratoriums should be revisited, especially they should be more targeted and limited to short-term relief.