Impacts of Credit Access on Agricultural Production and Rural Household’s Welfares in Northern Mountains of Vietnam

Bui Thi Lam, Ho Thi Minh Hop, Philippe Burny, Thomas Dogot, Tran Huu Cuong and Philippe Lebailly

Asian Social Science, 2019, vol. 15, issue 7, 119

Abstract: There is a great consensus on the positive impact of credit access on farmers' incomes and consumption, however, its effect on income inequality among different population segments is still a controversial issue. The paper aims to examine these concerns through using the mixed data collected from the sample of 193 households surveyed (demand-side) and in-depth interviewees with the key credit providers (supply-side) in Lao Cai, the sixth poorest province in Vietnam. At the grass root level, it is evident that better credit access not only significantly positive influences on the effectiveness of agricultural production, but also is the driving force for better structural transition within cultivation versus livestock. Besides this, it enhances both on-farm and off-farm income as well as the well-being of rural households. At the community-impact level, surprisingly, the financial development without agriculture-related supports causes to the negative effect on the distribution of agricultural outcomes and prolongs the inequality in the locality. In addition, an alarm regarding latent social issues has been generating from the preferential credit screen under the community-based lending method. Finally, policy implications are discussed to enhance the effectiveness and outreach of credit in the locality.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:ibn:assjnl:v:15:y:2019:i:7:p:119

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