The impact of the Vietnam Bank for Social Policies preferential credit on household welfare in Vietnam: a panel data analysis

Abstract:
Purpose
The study examines the impact of the preferential credit provided by the Vietnam Bank for Social Policies on poverty reduction in Ninh Binh province, Vietnam. It also identifies and ranks the barriers of accessing the credit.

Design/methodology/approach
The study applies fixed-effects method to handle the panel data to examine the impact of the credit on poverty reduction. It also uses face-to-face interviews and group discussions to identify and rank the barriers of accessing to the credit.

Findings
The results show that the credit (represented by loan volume) positively and significantly helps improve household income, but does not help to improve household consumption. The major barriers include the time spent to get to the nearest bank branch, banking support services provided to clients and the transparency of household poverty status assessment.

Research limitations/implications
Data are collected in three years and the number of the observations is limited to 300 households.

Practical implications
The VBSP preferential credit may need to be modified to significantly help reduce poverty and the VBSP and involved parties may need to eliminate the barriers so that the poor can have a better access to the credit.

Social implications
The VBSP preferential credit is one of the reasonable sources that can help eliminate poverty though increasing household income.

Originality/value
The VBSP preferential credit can help increase household income, but does not really help improve household consumption due to the small volume of loans. In addition, banking support services and the household poverty assessment are seen as barriers to the access of the poor.