Determinants of accessibility to microcredit in term of formal sector and informal sector

Abstract

Microcredit is an emerging concept helping the poor out of poverty situation. This dissertation attempts to investigate the determinants affecting the probability of participation in different types of credit sectors in terms of formal sector and informal sector. Using a sample size of 1,522 households participate in credit market from The Vietnam Access to Resources Household Survey (VARHS) 2012, bivariate probit model is employed to explore the determinants of household credit demand due to the binary nature of the dependent variables. Various explanatory variables include age, gender, marital_stt, edu, hhsize, income, savingamount, landsize, agriculture_act, network and location that influence probability of accessibility to different sectors of credit. Furthermore, relationship between dependent variables is accounted in this research. Results reveal that factors affecting formal credit participation are different from factors affecting informal credit participation. Additionally, the result indicates that there is negative correlation across two sectors of credit.