VLIR Policy Preparing Research Project
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Transcript of VLIR Policy Preparing Research Project
Operational and Institutional Obstacles for the Efficacy of Micro-
Credit Programs for Poverty Reduction in Vietnam
VLIR Policy Preparing Research Project
MIET MAERTENS
Thanks to: BTC Vietnam, Hanoi(Mr. Smis, Mrs. Tan and others)
Vietnamese Belgian Credit Project & Women’s Union(Mr. Bartsoen, Mrs. And others)
Micro-finance Resource Centre, Hanoi (Prof. Dao van Hung & Ms. Tran Bin Minh)
Vietnam National University of HCMC – Economics Faculty(Dr. Tran Viet Hoang and others)
Overview
• The Research Approach– Conceptual framework– Empirical approach
• The Rural Credit Market in Vietnam
• The outreach of
The Research ApproachThe Research Approach
Some Considerations• Micro-Finance = powerful instrument to
alleviate poverty• Micro-Finance = pro-poor financial services
– The poor need credit & financial services– The poor lack access to credit & financial services
Underdeveloped credit markets in developing countries Credit not affordable for the poor ??? The poor are not creditworthy ??? Economies of scale: lending to the poor associated with
high transaction costs !!! Asymmetric information: the poor have no possibilities
to signal their creditworthiness !!!
The Research ApproachThe Research Approach
Some Considerations• Pro-poor lending technologies:
innovative approaches that reduce transaction costs and replace the need for physical collateral as screening and signalling method
– Group-lending with joint liability (Grameen Bank) Reduced transaction costs: group-leader or regular
meetings Social collateral: borrowers screened by other group
members by accepting responsibility for debt repayment
– Stepwise loans
– Standardized products
The Research ApproachThe Research Approach
Theoretical Framework• Critical Triangle of Micro - Finance:
SUSTAINABILITY
OUTREACH IMPACT
Based on Zeller and Meyer, 2002
Synergies / Trade-offs & constraints ?
Long run Short run
The Research ApproachThe Research ApproachEmpirical Approach
• 2 Case-study areas:
– Low poverty rates but high incidence of poverty– Major rice growing areas– Variety of credit schemes
VBARD/SPB
PCF VBCP WVI
Doan Dao North: Red River Delta yes yes yesTam Da Hung Yen province yes yes yesPhan Sao Nam Phu Cu district yes yes yes
Tan Thanh South: Mekong Delta yes yesAn Huu Tien Giang province yes yes yesThien Tri Cai Be district yes
Micro-credit institutions & projectsCase-study areaCommune
The Research ApproachThe Research ApproachEmpirical Approach
• Data collection:– 1st phase: qualitative data – group discussions & interviews
2 case-study areas: central, province, district & local level
– 2nd phase: quantitative data – survey of 301 households
Southern case-study area
• Socio-economic description of the case-study areasCase-study area Northern Southern
Province pop. density 1,184 people / km2 678 people / km2
Average agr. area / hh 0.26 ha 0.42 haLandless hh 0% 30%Agriculture very seasonal less seasonal
The Rural Credit Market in VietnamThe Rural Credit Market in VietnamThe Formal Sector
• Institutions:– VBARD (Vietnam Bank for Agriculture and Rural Development)
– SPB (Social Policy Bank)
Law on Credit and Financial Institutions
State-owned banks
– CCF/PCF: Central/People’s Credit Fund
Law on Cooperatives
• Interest rate policy: – all ceilings removed since June 2002 but still i = 1% / month
– SPB: subsidized interest rates much criticism
The Semi-formal Sector
The Informal Sector
The Rural Credit Market in VietnamThe Rural Credit Market in VietnamThe Formal Sector
• Institutions:– VBARD (Vietnam Bank for Agriculture and Rural Development)
– SPB (Social Policy Bank)
Law on Credit and Financial Institutions
State-owned banks
– CCF/PCF: Central/People’s Credit Fund
Law on Cooperatives
• Interest rate policy: – all ceilings removed since June 2002 but still i = 1% / month
– SPB: subsidized interest rates much criticism
The Semi-formal Sector
The Informal Sector