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Determinants of Farming Households’ Credit Accessibility in Rural Areas of Vietnam: A Case Study in Haiphong City, Vietnam

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  • Ta Nhat Linh

    (School of Banking and Finance, National Economics University, Hanoi 100000, Vietnam
    Economy and Rural Development Unit, Gembloux Agro-Bio Tech, University of Liege, 5030 Gembloux, Belgium)

  • Dang Anh Tuan

    (School of Banking and Finance, National Economics University, Hanoi 100000, Vietnam)

  • Phan Thu Trang

    (School of Banking and Finance, National Economics University, Hanoi 100000, Vietnam)

  • Hoang Trung Lai

    (School of Banking and Finance, National Economics University, Hanoi 100000, Vietnam)

  • Do Quynh Anh

    (School of Banking and Finance, National Economics University, Hanoi 100000, Vietnam)

  • Nguyen Viet Cuong

    (Ministry of Labor, Invalids and Social Affairs, 12 Ngo Quyen Street, Hoan Kiem District, Ha Noi 100000, Vietnam)

  • Philippe Lebailly

    (Economy and Rural Development Unit, Gembloux Agro-Bio Tech, University of Liege, 5030 Gembloux, Belgium)

Abstract

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.

Suggested Citation

  • Ta Nhat Linh & Dang Anh Tuan & Phan Thu Trang & Hoang Trung Lai & Do Quynh Anh & Nguyen Viet Cuong & Philippe Lebailly, 2020. "Determinants of Farming Households’ Credit Accessibility in Rural Areas of Vietnam: A Case Study in Haiphong City, Vietnam," Sustainability, MDPI, vol. 12(11), pages 1-16, May.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:11:p:4357-:d:363127
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