Does microcredit improve rural households' social network? Evidence from Vietnam

Phan, Chung Thanh, Sun, Sizhong, Zhou, Zhang-Yue, and Beg, Rabiul (2020) Does microcredit improve rural households' social network? Evidence from Vietnam. The Journal of Development Studies. (In Press)

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Abstract

Although microcredit targets both financial and, more importantly, social returns, it is unclear in existing literature that whether participating in microcredit programs fosters social network. Filling this gap, this study aims to quantitatively test whether microcredit improves the social network of rural households in Vietnam. Specifically, with microcredit borrowing to fund its family business, a representative household is engaged in a two-stage decision problem, namely to first choose a social network and then consumption to maximise its lifetime utility. Utility maximisation yields an optimal social network as a function of microcredit borrowing, which is estimated using the VARHS dataset from 2008 to 2016 in Vietnam. We find that microcredit improves both rural household’s social network quality and size.

Item ID: 62832
Item Type: Article (Research - C1)
ISSN: 1743-9140
Copyright Information: © 2020 Informa UK Limited, trading as Taylor & Francis Group.
Date Deposited: 23 Jul 2020 01:56
FoR Codes: 12 BUILT ENVIRONMENT AND DESIGN > 1202 Building > 120202 Building Science and Techniques @ 40%
14 ECONOMICS > 1402 Applied Economics > 140218 Urban and Regional Economics @ 30%
14 ECONOMICS > 1403 Econometrics > 140304 Panel Data Analysis @ 30%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910201 Consumption @ 60%
91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910299 Microeconomics not elsewhere classified @ 40%
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