Impact evaluation of micro-credit on welfare and poverty on the Vietnam rural household

Abstract

This research evaluates the impact of microcredit on the welfare of households living in the Vietnam rural areas, especially the poor. The research is analyzed based on a data of the Vietnam household living standard survey (VHLSS) in the year 2008. The difference of the research in comparison with the previous studied about the relationship between microcredit and welfare is the employment of propensity score matching (PSM) method, thus it reflects the impact of microcredit on rural households’ living standard better and more precisely. The result shows that microcredit will result in better welfare of rural households via a greater increase in the income and consumption per capita per month of the participating households. However, the result about the poor rural households showed that microcredit does not result in a higher increase in income of the participants than that of the nonparticipants, but contributes to a greater rise in the consumption. The research also showed the determinants on the accessibility to microcredit programs of the households living in rural regions. The results found out that the probability of accessing the microcredit sources of the rural households in Vietnam is still low. Moreover, the proportionate of accessibility to microcredit of the poor household is even less that of the nonpoor households, which means microcredit programs mistarget the poor households. From those results, the research gives policy recommendations to improve microcredit programs in rural areas as well as to support more poor households to access to microcredit sources.