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Determinants of household access to formal credit in the rural areas of the Mekong Delta, Vietnam


  • Vuong Quoc, Duy


This paper investigates the factors affecting the access of rural individual and group-based households to formal credit in the Mekong Delta (MD), Vietnam. Poverty levels in the Mekong Delta have declined significantly over the last decades, but in the rural areas they remain significant. If it is assumed that access to credit is a suitable vehicle for poverty alleviation, it is necessary to assess the way households decide on borrowing. This paper identifies the determinants of the decision to borrow and of the amount that is borrowed by using the double hurdle model and the Heckman selection model. Data used in this paper were obtained from a survey of 325 rural households, conducted between May and October 2009. The results indicate that household capital endowments, marital status, family size, distance to the market centre, and location affect both the probability and the amount of asking for credit.

Suggested Citation

  • Vuong Quoc, Duy, 2012. "Determinants of household access to formal credit in the rural areas of the Mekong Delta, Vietnam," MPRA Paper 38202, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38202

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    References listed on IDEAS

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    More about this item


    Formal credit; Double hurdle model; individual and group-based lending; rural households;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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