Does microcredit increase household food consumption? A study of rural Vietnam

Phan, Chung Thanh, Sun, Sizhong, Zhou, Zhang-Yue, and Beg, Rabiul (2019) Does microcredit increase household food consumption? A study of rural Vietnam. Journal of Asian Economics, 62. pp. 39-51.

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Abstract

Although microcredit is considered a crucial tool for economic development, its contribution to improving the welfare of poor households is not well established. This study investigates this issue. We start with a theoretical model in which microcredit is used to finance the family business of a representative household. The household maximises its lifetime utility, which yields a dynamic optimal consumption path as a function of microcredit borrowing. Guided by the theoretical model, we then empirically estimate the impact of microcredit using a panel dataset of rural Vietnamese households for the period 2008–2016. We find that microcredit programs in rural Vietnam were effective in raising household food consumption in both the short and long terms. Nevertheless, the burden of loan repayment may have diminished food consumption with a lag.

Item ID: 62364
Item Type: Article (Research - C1)
ISSN: 1873-7927
Keywords: Microcredit, Household food consumption, Vietnam
Copyright Information: © 2019 Elsevier Inc. All rights reserved.
Date Deposited: 28 Feb 2020 06:05
FoR Codes: 14 ECONOMICS > 1401 Economic Theory > 140104 Microeconomic Theory @ 60%
14 ECONOMICS > 1403 Econometrics > 140304 Panel Data Analysis @ 40%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910201 Consumption @ 50%
91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910208 Micro Labour Market Issues @ 50%
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