Multi-market credit rationing: The determinants of and impacts on farm performance in Vietnam

Nguyen Tuan Anh, Christopher Gan and Dao Le Trang Anh

Economic Analysis and Policy, 2022, vol. 75, issue C, 159-173

Abstract: Vietnamese farm households have been suffering to a large extent from credit rationing that potentially impairs agricultural performance. Using primary data from a farm household survey in the Red River Delta region, we investigate the factors affecting agricultural credit rationing in Vietnam’s formal, semi-formal, and informal credit markets and how severely credit rationing in each market affects agricultural performance. The trivariate probit model’s results reveal that human, social, and physical capital factors help farm households ease credit rationing. A bad credit history and time to travel to credit sources increase farm households’ likelihood of being credit rationed. Credit rationing determinants vary among different credit markets implying segmentation of credit markets for agriculture. We adopt a multinomial endogenous treatment effects model to evaluate credit rationing’s impact on farm performance and find that credit rationing in any credit market has a severe, negative impact on agricultural outcomes for farm households. The study provides practical suggestions for policymakers and farm households to reduce credit rationing and boost the agricultural performance in Vietnam.

Keywords: Farm performance; Credit rationing; Trivariate probit model; Multinomial endogenous treatment effects; Vietnam (search for similar items in EconPapers)
JEL-codes: C31 C36 D13 G51 Q12 Q14 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:75:y:2022:i:c:p:159-173

DOI: 10.1016/j.eap.2022.05.008

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