Impact of Credit on Poor Household’s Income: Evidence from Rural Areas of Vietnam

Tran Thi Giang^{1, 2,} , Guohua Wang¹ and Nguyen Dinh Chien²

¹College of Public Administration, Huazhong University of Science and Technology, China

²College of Economics, Hue University, Vietnam

Cite this paper:
Tran Thi Giang, Guohua Wang and Nguyen Dinh Chien. Impact of Credit on Poor Household’s Income: Evidence from Rural Areas of Vietnam. Journal of Finance and Economics. 2015; 3(2):29-35. doi: 10.12691/jfe-3-2-1

Abstract

This study focuses on clarifying the relationship between credit and poor household’s incomes in rural area of Vietnam. In this investigation we applied the combined Difference and Difference (DID) method and Ordinary Least Squares (OLS) to estimate the panel data. Two data sets such as Vietnam Living Standard Survey (VLSS) of 2010 and 2012 with the sample size of 244 poor families in rural area of Vietnam used to test our model. Results of experimental study showed that credit has helped income of poor household to increase by 30% as compared to the average income of households. Formal credit has an important role when compared with informal credits that formal credit will help to increase income of the poor householder by double. In addition, the study also found positive effect on education, gender, ethnicity, region, the proportion of non-agricultural income as well. There are some negative impact on health and household size of the poor householders.

Keywords:
credit poor household’s income rural area

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