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The Interactive and Causal Relationship between Productivity and Financial Sustainability of People's Credit Funds in Vietnam

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  • Van Duong Ha

Abstract

Productivity and financial sustainability are the most complex areas of financial decision making due to its interrelationship with other financial decisions variables. At the same time, productivity and financial sustainability are factors affecting the operations and the goals of people's credit funds (PCFs) in Vietnam. The purpose of this study is to discover the interaction and causal relationship between productivity and financial sustainability and to examine factors that affect productivity and financial sustainability of PCFs. After regression analysis on a set of panel data from 2013 to 2018 of tweenty-four selected PCFs in Vietnam, it appears that deposit, credit growth rate and financial sustainability have positive relationships with productivity; depth of outreach has a negative relationship with productivity. Productivity, capital adequacy ratio, income have positive relationships with financial sustainability; credit growth rate has a negative impact on financial sustainability. The study finds bidirectional interactions and the causal relationship between productivity and financial sustainability. Based on the findings the study proposes policy measures that could be implemented by the managers of PCFs to increase productivity and ensure a more efficient distribution of economic resources. Beside, this study recommends that managers of PCFs and helps researchers, managers to understand the key determinants for better management of PCFs.

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  • Van Duong Ha, 2020. "The Interactive and Causal Relationship between Productivity and Financial Sustainability of People's Credit Funds in Vietnam," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 9, January.
    • Handle: RePEc:bjz:ajisjr:1863
    DOI: https://doi.org/10.36941/ajis-2020-0010
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    References listed on IDEAS

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    1. Abdul RASHID & Koire TWAHA, 2013. "Exploring the determinants of the productivity of indian microfinance institutions," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(12(589)), pages 83-96, December.
    2. Afsheen Abrar & Attiya Y Javaid, 2016. "The Impact of Capital Structure on the Profitability of Microfinance Institutions," South Asian Journal of Management Sciences (SAJMS), Iqra University, Iqra University, vol. 10(1), pages 21-37, Spring.
    3. Solomon Bizuayehu Wassie & Hitoshi Kusakari & Masahiro Sumimoto, 2019. "Performance of Microfinance Institutions in Ethiopia: Integrating Financial and Social Metrics," Social Sciences, MDPI, vol. 8(4), pages 1-13, April.
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