Determinants of Credit Participation and Its Impact on Household Consumption: Evidence From Rural Vietnam

Cuong H. Nguyen

No 703, CERT Discussion Papers from Centre for Economic Reform and Transformation, Heriot Watt University

Abstract: This paper analyses the Vietnam's rural credit market to understand the determinants of credit choices and to measure impacts of borrowing activities on borrower's consumption in the 1992-1998 period. There are three main results. First, there exists uniform access to formal credit among rural households in Vietnam. Households' financial activity is found to be determined by household size and agricultural work rather than education or distance from the commune to the nearest bank branch. Education level seems to have an inverse U-shape effect on credit taking possibility; the least and the most educated households borrow least. Second, there is evidence of money lenders being crowded out by formal institutions via competition. Finally, we apply fix-effected regression and propensity score matching estimation on cross-sectional and panel data to assess impact of credit taking on household consumption. Our study demonstrates that formal credit positively affects borrowers' consumption while informal finance has mixed results.

Keywords: rural credit; credit participation; Vietnam (search for similar items in EconPapers)
JEL-codes: O12 O16 O17 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-agr, nep-ban, nep-dev, nep-mfd, nep-sea and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://www2.hw.ac.uk/sml/downloads/cert/wpa/2007/dp0703.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hwe:certdp:0703

Access Statistics for this paper

More papers in CERT Discussion Papers from Centre for Economic Reform and Transformation, Heriot Watt University Contact information at EDIRC.
Bibliographic data for series maintained by Colin Miller ().