Rural Credit Market and Microfinance in Vietnam

The rural credit market in Vietnam is characterised as a segmented and emerging market where the growing demand for credit by the poor and low-income households is unmet. This chapter examines the main characteristics of three pillars in Vietnam rural credit market including demand, supply and government policies. While the demand for rural credit is unmet, the supply of credit simultaneously comes from formal, informal and semi-formal providers. To improve credit accessibility, government policies targeting the poor have overcome the obstacle of collateral loan for the poor; however, asymmetric information inherently prevents the poor from having access to credit not only from the borrower’s side but also from the credit institutions. Therefore, improving credit accessibility to the poor and rural households continues a challenging task for policy makers in order to achieve long term development goal in Vietnam.