Microcredit and Household Welfare : Evidence from Vietnam Bank for Social Policies

This paper evaluates how governmental microcredit affects rural households in Vietnam using panel data obtained from Vietnam Household Living Standards Surveys 2010, 2012, 2014. Employing household fixed-effects with instrumental variable, the results show that the Vietnam Bank for Social Policies (VBSP) microcredit program has no significant impact on total income of household. Decomposing the total income into smaller components, we find significant and positive impacts of microcredit on profits from farming activities, whereas insignificant impacts are found on such other components as income from wage and income profits from non-farming activities. The findings also show positive, significant impacts on total household expenditure, food consumption and spending on health care