[en] The role of agricultural sectors in the economic development of a country is undeniable, especially in developing and least-developed ones, ensuring food supply, increasing national income, export earnings and poverty reduction. Vietnam is known as an emerging market, depending directly on agriculture-related activities for their livelihood, in which the issue of rural credit access still remains a confounding problem. The paper focuses on identifying the determinants of credit access in rural areas of Vietnam using Haiphong city as a case study, including formal and informal credit. The paper uses data collected from a survey of 180 rural households in a district of Haiphong city. The probit and linear regression models are applied to investigate the factors that determine household credit accessibility, i.e., the household’s decision to borrow and borrowing amounts. Results of this analysis reveal the different significant determinants of formal and informal credit market access. Group membership and connection are found to have significantly strong impacts on formal credit accessibility while informal credit access is strongly influenced by agriculture income and dependency ratio. The implications of these findings for enhancing formal credit accessibility and decreasing the dependence on informal markets are discussed.
Disciplines :
Agriculture & agronomy
Author, co-author :
Ta Nhat Linh ; Université de Liège - ULiège > Gembloux Agro-Bio Tech
Dang Anh, Tuan
Phan Thu, Trang
Hoang Trung, Lai
Do Quynh, Anh
Nguyen Viet, Cuong
Lebailly, Philippe ; Université de Liège - ULiège > Département GxABT > Modélisation et développement
Language :
English
Title :
Determinants of Farming Households’ Credit Accessibility in Rural Areas of Vietnam: A Case Study in Haiphong City, Vietnam
Publication date :
2020
Journal title :
Sustainability
eISSN :
2071-1050
Publisher :
Multidisciplinary Digital Publishing Institute (MDPI), Basel, Switzerland
Special issue title :
Special Issue "Sustainable Rural Economics Development in Developing Countries"
Soubbotina, T.P., Sheram, K., (2000) Beyond Economic Growth: Meeting the Challenges of Global Development, , World Bank Publications: Washington, DC, USA
Guirkinger, C., Understanding the coexistence of formal and informal credit markets in Piura, Peru (2008) World Dev, 36, pp. 1436-1452
(2018) Haiphong Statistical Year Book, , Statistic Publisher: Hanoi, Vietnam
Diagne, A., Zeller, M., Sharma, M., (2000) Empirical Measurements of Households' Access to Credit and Credit Constraints in Developing Countries: Methodological Issues and Evidence, , International Food Policy Research Institute: Washington, DC, USA
Zeller, M., Ahmed, A.U., Babu, S.C., Broca, S., Diagne, A., Sharma, M.P., (1996) Rural Finance Policies for Food Security of the Poor: Methodologies for a Multicountry Research Project, , International Food Policy Research Institute: Washington, DC, USA
Diagne, A., Zeller, M., (2001) Access to Credit and Its Impact on Welfare in Malawi, 116. , International Food Policy Research Institute: Washington, DC, USA
Zeller, M., Determinants of credit rationing: A study of informal lenders and formal credit groups in Madagascar (1994) World Dev, 22, pp. 1895-1907
Lin, L., Wang, W., Gan, C., Cohen, D.A., Nguyen, Q.T., Rural credit constraint and informal rural credit accessibility in China (2019) Sustainability, 11, p. 1935
Evans, T.G., Adams, A.M., Mohammed, R., Norris, A.H., Demystifying nonparticipation in microcredit: A population-based analysis (1999) World Dev, 27, pp. 419-430
Gray, A., (2006) Credit Accessibility of Small-Scale Farmers and Fisherfolk in the Philippines, , Lincoln University: Lincoln, UK
Hananu, B., Abdul-Hanan, A., Zakaria, H., Factors influencing agricultural credit demand in Northern Ghana (2015) Afr. J. Agric. Res, 10, pp. 645-652
Kosgey, Y.K.K., Agricultural credit access by grain growers in Uasin-Gishu County, Kenya (2013) IOSR J. Econ. Fin, 2, pp. 36-52
Luan, D., Bauer, S., Kuhl, R., Income Impacts of credit on accessed households in rural Vietnam: Do various credit sources perform differently (2016) Agris On-Line Pap. Econ. Inf, 8, pp. 57-67
Barslund, M., Tarp, F., Formal and informal rural credit in four provinces of Vietnam (2008) J. Dev. Stud, 44, pp. 485-503
Yehuala, S., (2008) Determinants of Smallholder Farmers Access to Formal Credit: The Case ofMetema Woreda, , Haramaya University: North Gondar, Ethiopia
Akudugu, M., Estimation of the determinants of credit demand by farmers and supply by rural banks in Ghana's Upper East Region (2012) Asian J. Agric. Rural Dev, 2, pp. 189-200
Sebatta, C., Wamulume, M., Mwansakilwa, C., Determinants of smallholder farmers' access to agricultural finance in Zambia (2014) J. Agric. Sci, 6, p. 63
Mohieldin, M.S., Wright, P.W., Formal and informal credit markets in Egypt (2000) Econ. Dev. Cult. Chang, 48, pp. 657-670
Sharma, R., Gupta, S., Bala, B., Access to Credit-A Study of Hill Farms in Himachal Pradesh (2007) J. Rural Dev.-Hyderabad, 26, p. 483
Quach, H., Mullineux, A., The impact of access to credit on household welfare in rural Vietnam (2007) Res. Account. Emerg. Econ, 7, pp. 279-307
Duy, V.Q., D'Haese, M., Lemba, J., D'Haese, L., Determinants of household access to formal credit in the rural areas of the Mekong Delta, Vietnam (2012) Afr. Asian Stud, 11, pp. 261-287
Li, X., Gan, C., Hu, B., Accessibility to microcredit by Chinese rural households (2011) J. Asian Econ, 22, pp. 235-246
Okurut, F.N., Schoombee, A., van der Berg, S., Credit Demand and Credit Rationing in the Informal Financial Sector in Uganda 1 (2005) S. Afr. J. Econ, 73, pp. 482-497
Saleem, A., Jan, F.A., Khattak, R.M., Quraishi, M.I., Impact of Farm and Farmers Characteristics on Repayment of Agriculture Credit (2011) Abasyn Univ. J. Soc. Sci, 4, pp. 23-35
Field, E., Torero, M., (2006) Do Property Titles Increase Credit Access among the Urban Poor? Evidence from a Nationwide Titling Program, , Working Paper
Department of Economics, Harvard University: Cambridge, MA, USA
Chandio, A.A., Jiang, Y., Determinants of Credit Constraints: Evidence from Sindh, Pakistan (2018) Emerg. Mark. Financ. Trade, 54, pp. 3401-3410
Duniya, K., Adinah, I., Probit analysis of cotton farmers' accessibility to credit in northern guinea savannah of Nigeria (2015) Asian J. Agric. Ext. Econ. Sociol, pp. 296-301
Oboh, V.U., Ekpebu, I.D., Determinants of formal agricultural credit allocation to the farm sector by arable crop farmers in Benue State, Nigeria (2011) Afr. J. Agric. Res, 6, pp. 181-185
Bao Duong, P., Izumida, Y., Rural Development Finance in Vietnam: A Microeconometric Analysis of Household Surveys (2002) World Dev, 30, pp. 319-335
Khoi, P.D., Gan, C., Nartea, G.V., Cohen, D.A., Formal and informal rural credit in the Mekong River Delta of Vietnam: Interaction and accessibility (2013) J. Asian Econ, 26, pp. 1-13
Rahji, M., Fakayode, S., A multinomial logit analysis of agricultural credit rationing by commercial banks in Nigeria (2009) Int. Res. J. Financ. Econ, 24, pp. 97-103
Ayamga, M., Sarpong, D., Asuming-Brempong, S., Factors influencing the decision to participate in micro-credit programme: An illustration for Northern Ghana (2006) Ghana J. Dev. Stud, 3, pp. 57-65
Bigsten, A., Collier, P., Dercon, S., Fafchamps, M., Gauthier, B., Gunning, J.W., Oduro, A., Söderbom, M., Credit constraints in manufacturing enterprises in Africa (2003) J. Afr. Econ, 12, pp. 104-125
Heltberg, R., Rural market imperfections and the farm size-productivity relationship: Evidence from Pakistan (1998) World Dev, 26, pp. 1807-1826
Rahman, S., Hussain, A., Taqi, M., Impact of agricultural credit on agricultural productivity in Pakistan: An empirical analysis (2014) Int. J. Adv. Res. Manag. Soc. Sci, 3, pp. 125-139
Hussain, A., Thapa, G.B., Smallholders' access to agricultural credit in Pakistan (2012) Food Secur, 4, pp. 73-85
Saqib, S.E., Ahmad, M.M., Panezai, S., Landholding size and farmers' access to credit and its utilisation in Pakistan (2016) Dev. Pract, 26, pp. 1060-1071
Zeller, M., Diagne, A., Mataya, C., Market access by smallholder farmers in Malawi: Implications for technology adoption, agricultural productivity and crop income (1998) Agric. Econ, 19, pp. 219-229
Linh, T.N., Long, H.T., Chi, L.V., Tam, L.T., Lebailly, P., Access to rural credit markets in developing countries, the case of Vietnam: A literature review (2019) Sustainability, 11, p. 1468
Grootaert, C., Oh, G.T., Swamy, A., Social capital, household welfare and poverty in Burkina Faso (2002) J. Afr. Econ, 11, pp. 4-38
Okten, C., Osili, U.O., Social networks and credit access in Indonesia (2004) World Dev, 32, pp. 1225-1246
Luan, D.X., Bauer, S., Does credit access affect household income homogeneously across different groups of credit recipients? Evidence from rural Vietnam (2016) J. Rural Stud, 47, pp. 186-203
Kochar, A., An empirical investigation of rationing constraints in rural credit markets in India (1997) J. Dev. Econ, 53, pp. 339-371
Pham, T.T.T., Lensink, R., Lending policies of informal, formal and semiformal lenders: Evidence from Vietnam (2007) Econ. Transit, 15, pp. 181-209
Siamwalla, A., Pinthong, C., Poapongsakorn, N., Satsanguan, P., Nettayarak, P., Mingmaneenakin, W., Tubpun, Y., The Thai rural credit system: Public subsidies, private information, and segmented markets (1990) World Bank Econ. Rev, 4, pp. 271-295
Nagarajan, G., Meyer, R.L., Hushak, L.J., Demand For Agricultural Loans: A Theoretical and Econometric Analysis Of The Philippine Credit Market/La Demande De Préts Agricoles: Une Analyse Théorique Et Économique Du Marché De Credit Aux Philippines (1998) Sav. Dev, 22, pp. 349-363
Ghosh, R., Gupta, K.R., Maiti, P., (2008) Development Studies, 3, p. 5. , Atlantic Publishers & Dist: New Delhi, India
Thornton, P.K., van de Steeg, J., Notenbaert, A., Herrero, M., The impacts of climate change on livestock and livestock systems in developing countries: A review of what we know and what we need to know (2009) Agric. Syst, 101, pp. 113-127
Tanaka, T., Camerer, C.F., Nguyen, Q., Risk and time preferences: Linking experimental and household survey data from Vietnam (2010) Am. Econ. Rev, 100, pp. 557-571
Marsh, S.P., MacAulay, T.G., Hung, P.V., (2006) Agricultural Development and Land Policy in Vietnam, p. 272. , Australian Centre for International Agricultural Research (ACIAR): Canberra, Australia
Dinh, Q.H., Dufhues, T.B., Buchenrieder, G., Do connections matter? Individual social capital and credit constraints in Vietnam (2012) Eur. J. Dev. Res, 24, pp. 337-358