Ảnh hưởng của tiếp cận tín dụng ngân hàng đến thu nhập hộ gia đình việt nam tt tiếng anh

Theoretically and previous research in the world and in Vietnam related to the impact of access to bank credit on household income shows that there are conflicting results.. Thirdly, alm

STATE BANK OF VIETNAM MINISTRY OF EDUCATION AND TRAINING

BANKING UNIVERSITY OF HO CHI MINH CITY

TRAN LONG GIANG

Impact of bank credit accessibility to

Vietnamese household income

Major: Banking and Finance Code: 9340201

Tp Ho Chi Minh - 2019

The dissertation was completed at Banking University of Ho Chi Minh City

Supervisor: Assoc.Prof.Dr Hoang Thi Thanh Hang

The dissertation can be found at: Banking University HCMC’s Library

National Library, Tp Ho Chi Minh

CHAPTER 1 INTRODUCTION 1.1 Problem statement

According to the report of General Statistics Office in 2016, the proportion of people living in rural areas of Vietnam accounted for about 68%, equivalent to 61.2 million people Therefore, agriculture and rural areas have been of special interest to the Government in recent years In particular, the regulation of the bank credit market is considered as an important policy of the Government to help reduce poverty in rural areas where agriculture, forestry and fishery activities are essential Specifically, Decree No 55/2015 / ND-CP dated 09/6/2015 on credit policies for agricultural and rural development or Decision No 813 / QD-NHNN dated April 24,

2017 on the loan program to encourage the development of hi-tech agriculture, clean agriculture, etc has been implemented However, rural households have difficulties

in accessing credit in general and access to bank credit in particular

Theoretically and previous research in the world and in Vietnam related to the impact of access to bank credit on household income shows that there are conflicting results Several studies show that access to credit has a positive effect on household income (Dinh Phi Ho and Dong Duc, 2015; Li et al., 2013) However, other studies suggest that access to credit does not improve household income (Phan Thi Nu, 2013; Takahashi et al., 2010) In this study, the author fills the following research gaps:

Firstly, the author chooses the time of study in 2014 and 2016 to eliminate the shock of the economic crisis in 2008 that affects the sustainability of the estimated coefficients This is a new point in the scope of the study time that previous studies have not updated

Secondly, the research uses the difference in difference (DID) method to combine pooled regression data (Pooled-OLS) to assess the effect of bank credit access on household income that rarely use in Vietnam (Dinh Phi Ho and Dong Duc, 2015)

Thirdly, almost no studies have been systematically conducted in Vietnam to measure the factors that affect access to bank credit, using the control group of households only access to non-bank credit to comprehensively assess other control factors such as household financial and credit characteristics

Fourthly, another research gap that the study will fill is the large sample with

598 households in 61 provinces / cities from the Vietnam Household Living Standards Survey Data Set (VHLSS) of 2014 and 2016 were repeated Therefore, the estimation results will be more reliable with smaller samples that the studies use

Finally, in this study, the credit characteristics of households are more diversified, taking into account various aspects such as the amount of time they borrowed, unpaid loans, and the cost of obtaining loans, etc

Therefore, this study was conducted to identify the factors affecting access to bank credit and the impact of bank credit on the income of rural households in Vietnam

1.2 Objectives and research questions

1.2.1 Resreach objectives

Originating from practical and theoretical meanings, the overall objective of this study is to identify the factors affecting access to bank credit and the impact of bank credit on household income From there, two specific goals are set as follows:

(i) Identify and measure the factors affecting the access to bank credit of rural households in Vietnam

(ii) Measure the impact of bank credit on the income of rural households in Vietnam

(iii) How does bank credit affect the income of rural households in Vietnam?

1.3 Research subject and scope of the study

Research subject: Factors affecting to bank credit accessibility in two aspects (i) ability to receive bank loans compared to the control group are households that only access credit non-bank; (ii) total borrowed money from rural households Income of rural households in Vietnam is also a main subject of the research

Scope of the study: The study focused on rural Vietnamese households in

2014 and 2016 in 61 provinces / cities The impact of credit accessibility for production activities on household income

1.4 Methods and research data

1.4.1 Methodology

To identify and measure the factors affecting to the bank credit accessibility

of rural households in Vietnam, the study uses two-step Heckman method (Heckman, 1979)

The difference or double difference (DID) method is used to measure the impact of bank credit accessibility on the income of rural households in Vietnam DID method allows to compare the difference between the results of participants (intervention group) and non-participants (control group) program or policy

1.4.2 Research data

This study uses secondary data from the Vietnam Household Living Standards Survey Data Set (VHLSS) of 2014 and 2016 The survey scope for this data set is 61 provinces and cities that are actually carried out by the General Statistics Office (Appendix 1) Survey subjects are households, members of households and communes / wards in rural Vietnam

1.5 Contribution of the dissertation

Firstly, an overview of the current situation and comparison of credit accessibility and income of rural households in Vietnam in 2014 and 2016

Secondly, the study provides new evidence on the impact of bank credit accessibility on the income of rural households in Vietnam in 2014 and 2016

Thirdly, the research findings complement the scientific justification for other relevant studies under two aspects of the problem: (i) Factors affecting the bank's ability to access bank credit rural households in Vietnam with the control group are households with access to non-bank credit only; (ii) The impact of access to bank credit on the income of rural households in Vietnam

Fourthly, the results of the study suggest a number of appropriate policies for relevant organizations to improve access to bank credit, efficient use of capital, and increase income of Rural households in Vietnam

1.6 The structure of the dissertation

The content of the thesis is structured into 5 chapters:

Chapter 1 "Introduction" In this chapter, the author presents important contents of the topic including research issues, research objectives and questions, subjects and scope of research, research methods and data, and contributions and the structure

Chapter 2 "Overview of theory and previous studies" In this chapter, the author reviews the theories and previous studies related to factors affecting access to bank credit and the impact of bank credit on income Therefore, asymmetric information in financial markets, economic development theory, sustainable livelihood theory, the economic basis of microfinance are considered fundamental theories

Chapter 3 "Research Methods" The research process, experimental models and selected methods corresponding to each objective will be presented in detail in this chapter

Chapter 4 "Research results and discussion" This chapter will present descriptive statistical results, quantitative analysis, and discuss research results to answer the first research question This chapter will also present descriptive statistical results, quantitative analysis, and discuss research results to answer the second research question

Chapter 5 "Conclusions and recommendations" The author summarizes the main research results Since then, a number of relevant policy implications are also recommended to improve rural household's access to bank credit in relation to

income

CHAPTER 2 OVERVIEW OF THEORIES AND PREVIOUS RESEARCH 2.1 Theoretical basis

2.1.1 Theoretical basis on the factors affecting credit accessibility

(i) Information asymmetric

Asymmetric information or imperfect information was first introduced by Akerlof (1970) that led to adverse selection problems and adverse selection and moral risks hazard) are considered fundamental theories explaining the limited access to credit of households, especially poor households with low income levels (Stiglitz and Weiss, 1981; Williamson, 1987)

According to Stiglitz and Weiss (1981), for the credit market, the negative option is also a consequence of asymmetric information which means that potential borrowers who are more at risk are often looking for loans and are selected, in which the distinction between the less risky and the more risky borrower is reflected in the interest rate However, raising interest rates to compensate for the high costs of credit risk can push less risky borrowers out of the market As a result, lenders only lend for high risk projects Asymmetric information also leads to moral or psychological risk, which is the situation where the borrower no longer has the incentive to try or act appropriately as before the transaction occurred by the person Loans bear a portion of the risk Consequently, the borrower cannot repay the debt

In general, the decision on how much credit to grant and how much to give depends

on the information the lender gets from the borrower As a result, not all borrowers have access to credit

(ii) Factors affecting access to credit

Although financial development has a broad impact on the economy, credit accessibility of households is necessary for adequate research Credit accessibility in developing countries in general and in Vietnam in particular is improving but there are still many factors preventing households from using the financial system in a comprehensive way Indeed, in countries with underdeveloped financial systems, poor households have less access to credit than wealthy households

2.1.2 Theoretical basis on the effect of access to credit to income

(i) Development Economic Theory

One of the common methods used to assess the contribution of factors to GDP growth is to use a production function with two basic inputs: capital and labor The increase in output in the economy is due to two main components: (i) the increase of inputs; (ii) the increase in productivity is measured by the Total Factor Productivity (TFP)

In addition, Claessens and Feijen (2007) point out that access to financial services is a measure of the development of the financial sector The analysis of the financial, income and millennium goals of this study shows that access to financial services has a positive effect on income Income affects health, education and gender equality and vice versa In addition, higher incomes reduce poverty (Figure 2.1)

Figure 2.1 The relationship between finance, income and the millennium goals

Source: Claessens và Feijen (2007)

(ii) Sustainable Livelihood Theory

Today, the livelihood approach has been widely used when studying the socio-economic characteristics of households in developing countries Livelihood (Chambers) is defined by Chambers & Conway (1992) as follows: “Livelihoods include capacity, assets (reserves, resources, requirements and access) and the activities required to ensure the Livelihoods: livelihoods are only sustainable when they can cope with and recover from shocks, maintain or improve their capacities and assets, and provide sustainable livelihood opportunities for generations to come next; and to contribute net benefits to other livelihoods at the local or global level, in the short and long term ”(Chambers & Conway, 1992, p.6)

(iii) The economic basis of microfinance

One of the first laws of economics is the law of diminishing marginal returns

to capital

2.2 Review previous studies

2.2.1 Previous studies on factors affecting credit accessibility

There are many domestic and foreign studies on the factors affecting access to credit with various methods, stages of research and scope of research However, the research results also do not have high consensus

2.2.2 Previous studies on the effect of credit accessibility to income

According to Claessens and Feijen (2007), access to financial services in general and access to credit in particular have an important contribution to income, especially for poor households A number of studies are currently being conducted to assess the effect of credit accessibility and other factors on the income of households

in many countries around the world and local perspective

2.3 Current situation of bank credit accessibility in the world

Based on the Financial Access Survey (FAS) of the IMF (2017), the results show the disproportionate or imbalance in gender in financial access in general and credit accessibility in particular, especially in official financial services This directly

Health, education and gender equality

Poor (income poverty and malnutrition)

affects household income and investment opportunities for everyone, resulting in a negative effect on a country's growth and economic development potential FAS survey data in 2016 provides financial accessibility information from commercial banks of 5 countries including Cabo Verde, Chile, Costa Rica, Malaysia and Poland

in the period 2010 - 2016 shows that the percentage of female borrowers accounts for less than 50% In particular, the lowest average rate is Costa Rica and the highest

is Poland

According to the World Bank's Global Financial Database (GFD) in 2017, half of adults in the world reported having borrowed money in the past year This ratio is higher in developed countries where most of the formal credit is provided by financial institutions or credit cards In contrast, in developing countries, borrowing

in the non-bank market (through family and friends) accounts for a significant proportion

2.4 Lessons for Vietnam

(i) For banks

Firstly, there is greater transparency in the financial performance and market information of banks: there is very little data on market demand for credit accesssibility of rural households as well as information on banks The financial efficiency of banks is widely communicated to rural households This reduces to bank credit accessibility

Secondly, sharing credit information can reduce risk and increase credit accessibility: Collecting information from a variety of sources and providing records

of individuals and businesses' repayment behavior for a variety of uses Through this activity, asymmetric information is cut down significantly, thus allowing lenders to screen borrower information at a lower cost As a result, lenders can make credit decisions faster and reduce risks, increasing access to credit Experience from countries with better credit information systems often provides more loans to individuals and businesses, even after controlling per capita income and contract enforcement

Although the credit information system has many benefits, it is still in its infancy in developing countries In addition, the information sharing among lenders

is still weak because they are afraid of information leakage to customers Experience

in many countries around the world shows that the coverage of credit information systems is directly proportional to credit access

(ii) For households

Firstly, households need to invest in education and self-improvement of job skills to effectively use bank credit to increase household income

Secondly, proactively accessing information on the credit market to improve access to bank credit

Thirdly, actively participate in mass organizations to share information and receive community support in accessing bank credit

Fourthly, legalizing collateral to improve access to bank credit

Fifthly, improve management capacity in production activities

Sixthly, use bank credit for the right purpose

(iii) For Government

Firstly, promoting financial infrastructure: The banking and financial system

is increasingly developing, especially in developing countries Therefore, financial infrastructure needs to be upgraded to keep pace with the development of the market Typically, the application of modern information technology in credit will improve

to bank credit accessibility

Secondly, promote consumer protection: As more financial service providers enter the market, competition is increasingly fierce even in rural areas With increasingly diversified and complex financial services, consumer protection is increasingly urgent, especially in rural areas when education levels are significantly lower than in urban areas

Thirdly, collaborative efforts: Need for closer coordination between central banks, banks and local mass organizations to bring more access to credit for rural households

CHAPTER 3 RESEARCH METHODS 3.1 Research process

The basic research process consists of 5 steps:

Step 1: Research theory and previous studies related to factors affecting credit access and the impact of credit access on income

Step 2: Building models and research methods

Step 3: Collect and process data

Step 4: Results and discussion

Step 5: Conclusions and recommendations

is that households do not have access to bank credit (Gujarati, 1995) In addition, the two-step Heckman method not only assesses the ability to access bank credit but also shows why some households borrow more while others borrow less

3.2.2 Estimate the effect of credit access on income

To measure the impact of bank credit access on the income of rural households in Vietnam, the study used a difference method or a difference (DID) This is a method commonly used in studies to assess the effectiveness of a program

or policy (Khandker et al., 2009) DID method allows to compare the difference between the results of participants (intervention group) and non-participants (control group) program or policy In order to implement this method, it is necessary to identify the intervention and control groups and make an initial investigation, then continue to investigate further for both groups after the implementation of the program or policy Based on that, the DID method calculates the average difference between the intervention and control groups before and after affected by the program

in bank credit and 1 if it is the time after the influence of the bank credit program; X

is the control variable that can affect household income including personal

characteristics (age, gender, ethnicity, marital status, educational status of the household head), personal characteristics demographics (household size, dependency ratio), household financial characteristics (personal, savings, value of outstanding loans, loan period of unpaid loans) of credit (official interest rate, loan term, total value of collateral, guarantor, amount to be borrowed for the loan, the purpose of the loan as per the loan application, the actual purpose of the loan use of loans, mortgage

of assets), members of associations (Farmer's Union, Women's Union, head of the Party, Veterans Association), natural shock;  is noise Symbols, measurements and basis for selecting variables are detail described in Table 3.1

3.3 Research data

This study uses secondary data from the Vietnam Household Living Standards Survey Data Set (VHLSS) of 2014 and 2016 The survey scope for this data set is 64 provinces and cities that the General Statistics office actually carried out basing on a basic template to choose Survey subjects are households, members

of households and communes/wards

The survey applied direct interview method through questionnaire and interviewers met the head and other members of household

In this study, the author chooses only two years of study, 2014 and 2016, to eliminate the shock caused by the global economic crisis in 2008-2009 as an unsustainable estimate The sample total used in this study is 598 households repeating in 61 provinces To assess the impact of credit access on household income, the study categorized credit into two categories: (i) bank credit including Social Policy Bank, Vietnam Bank for Agriculture and Rural Development, other commercial banks; (ii) non-bank credit from Farmer's Union, Veteran's Union, Women's Union, from traders, friends, relatives, etc The purpose of selecting two groups of households to access credit for Comprehensive pricing of other control factors that may affect household income, especially credit characteristics, that information is not collected in households that do not access to credit

Table 3.1 Describe the variables in the study

Average

income

household annual income from all sources Unit: Thousand dong

Kiplimo et al (2015),

Development Economics Research (2010) access to

bank credit

Foac (m8c7) Equal 1 if borrowed from

Social Policy Bank and

Vietnam Bank for Agriculture

commercial banks; 0 other cases

head Development

Economics Research (2010), Dinh Phi Ho and Dong Duc (2015), Nguyen Quoc Oanh and Pham Thi My Dung (2010), Vuong Quoc Duy and Dang Hoang Trung (2015)

Gender of

head of

household

Sex (m1ac2) The dummy variable, with a

value of 1 if the head of household is male and 0 if the head of household is female

Ololade and Olagunju (2013), Development

Economics Research (2010), Dinh Phi Ho and East Germany (2015), Vuong Duy and Dang Hoang Trung (2015)

Nation Eth (dantoc) The dummy variable, which is

set to 1 if it's a Kinh and 0 if it's a different ethnicity

Research on Development

Economics (2010), Dinh Phi Ho and East Germany (2015)

Marital

status

Sta (m1ac8) The dummy variable receives a

value of 1 if the head of the household is married and 0 if the other cases

Ololade and Olagunju (2013), Development

Economics Research (2010) Educational

status of

the head of

household

Edu (m2ac2a) Educational dummy variable,

receiving value in turn equal to: 1 if "No degree"; 2 if

"Primary"; 3 if "Secondary school"; 4 if “High school”; 5

if "College"; 6 if "University";

7 if "Other"

Assogba et al (2017), Nguyen (2007),

Development Economics Research (2010), Dinh Phi Ho and East Germany (2015)

Development Economics Research (2010), Dinh Phi Ho and East Germany

(2015) Proportion

of

dependents

under 16 years old and the elderly over 60 years old on the total number of household members

Dinh Phi Ho and East Germany (2015)

Financial characteristics

Average

income

household annual income from all sources Unit: Thousand dong

Kiplimo et al (2015),

Development Economics Research (2010) Personal

sponsorship

InF (m4dc2_01/m4dc2_06)

Dummy variable of personal sponsorship, receiving value of

1 if the household has received money from relatives, zero if not

Research on Development

Economics (2010), Dinh Phi Ho and East Germany (2015)

Saving Sav (m8c3b) The dummy variable for

savings, receives a value of 1

if the household deposits and 0

if the household does not deposit

Dinh Phi Ho and East Germany (2015)

Credit characteristics

Time

borrowed

LoanTime The time the loan has not been

repaid Unit: Year Value of

Fee (m8c10) The amount of money to pay

for a loan Unit: Thousand dong

Tar0 (m8c13) The dummy variable for the

loan application is a value of 1

if the loan for agricultural activities includes "Other crops", "Livestock",