IS A GOVERNMENTAL MICRO‐CREDIT PROGRAM FOR THE POOR REALLY PRO‐POOR? EVIDENCE FROM VIETNAM

Cuong Nguyen

The Developing Economies, 2008, vol. 46, issue 2, 151-187

Abstract: It is argued that without collateral the poor often face binding borrowing constraints in the formal credit market. This justifies a micro‐credit program, which is operated by the Vietnam Bank for Social Policies to provide the poor with preferential credit. The present paper examines poverty targeting and the impact of the micro‐credit program. It is found that the program is not very pro‐poor in terms of targeting. The nonpoor account for a larger proportion of the participants. The nonpoor also tend to receive larger amounts of credit compared to the poor. However, the program has reduced the poverty rate of the participants. The positive impact is found for all three Foster‐Greer‐Thorbecke poverty measures.

Date: 2008
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