Factors Affecting on Access to Formal Credit of Households in the Mekong Delta, Vietnam

This paper investigates the factors affecting the access of rural households to formal credit in the Mekong Delta (MD), Vietnam. Poverty levels in the Mekong Delta have reduced significantly over the last decades, but in the rural areas they remain significant. If it is assumed that access to credit is a vehicle for poverty alleviation, it is necessary to assess how households decide on borrowing. This paper identifies the determinants of the decision to borrow and of the amount that is borrowed. Data used in this paper was obtained from a survey of 279 rural households, conducted between May and October 2009. The results of the Heckman Selection Model indicate that education, Vietnamese ethnicity, location, and the marital status of household's head affect the probability to ask for credit and the size of loan obtained