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The interrelationships among the formal, semiformal and informal credit demands of farm households in Vietnam

Nguyen Tuan Anh (Faculty of Agribusiness and Commerce, Lincoln University , Lincoln, New Zealand ) (Research Department, BIDV Training and Research Institute , Ha Noi, Vietnam )
Christopher Gan (Faculty of Agribusiness and Commerce, Lincoln University , Lincoln, New Zealand )
Dao Le Trang Anh ( School of Banking and Finance , National Economics University , Hanoi, Vietnam ) (Faculty of Agribusiness and Commerce, Lincoln University , Lincoln, New Zealand )

International Journal of Social Economics

ISSN: 0306-8293

Article publication date: 4 March 2021

Issue publication date: 4 May 2021

128

Abstract

Purpose

This study simultaneously explores the nexus among formal, semiformal and informal credit markets and farm households' credit demand determinants in Vietnam.

Design/methodology/approach

This study uses a multistage stratified random sampling process for a survey of 648 smallholder farmers in the Red River Delta (RRD), Vietnam. The trivariate probit model (TVPM) is used to address the interdependence of farm households' credit demands in different credit markets.

Findings

The results reveal complementary relationships among two pairs of credit markets (formal versus informal and semiformal versus informal). There are dissimilarities among the determinants (household characteristics, household head's characteristics, credit history and geographic factors) of farm households' credit demands in different markets, reflecting segmentation of Vietnam credit markets.

Practical implications

The study's empirical findings are important for policymakers and credit providers to enhance farm households' access to credit for agriculture and to improve the operations of the three credit markets.

Originality/value

This is the first empirical study in Vietnam and one of few in other developing countries simultaneously exploring the determinants of credit demand in and interrelationships among all three credit markets to provide more comprehensive and accurate results.

Keywords

Acknowledgements

The authors would like to thank two anonymous reviewers for their contributive and valuable comments and suggestions. Author Nguyen Tuan Anh acknowledges the Ministry of Foreign Affairs and Trade of New Zealand for granting the New Zealand ASEAN scholarship to conduct this study.

Citation

Tuan Anh, N., Gan, C. and Anh, D.L.T. (2021), "The interrelationships among the formal, semiformal and informal credit demands of farm households in Vietnam", International Journal of Social Economics, Vol. 48 No. 5, pp. 776-791. https://doi.org/10.1108/IJSE-11-2020-0734

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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