The impact of credit policy on improving Vietnamese household living standards in the time of Covid-19 pandemic

Abstract

Many studies have assessed the impact of credit programs on household income in the world and in Vietnam. There are authors who provide positive evidence for the effectiveness of credit programs as well as for the ineffectiveness of improving household income. Using panel data drawn from two packages of data, VHLSS (Vietnam Household Living Standard Survey) 2018 and 2020, on the basis of the Difference in Differences (DiD) technique combined with a POOL-OLS regression model and Propensity Score Matching (PSM) combined with DiD, this approach identifies the impact of formal credit on household income in Vietnam and also evaluate the policy comprehensively in COVID-19 pandemic. The results show that it is reasonable and necessary for Vietnamese people to receive credit support. Positive factors of credit policy improve the income of the entire household during the Covid-19 pandemic. Credit is also a driving force to fight the pandemic, helping households to invest in essential factors such as better education and living. This study emphasizes that the implementation of credit is an essential strategy for improving Vietnamese household living standards but policymakers should not excessively interfere with the financial market. At the same time, this study has great significance in reinforcing the importance of credit, thereby encouraging access to credit and proposing solutions in risk management in the face of crises.