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Microfinance in Vietnam - A Survey of Schemes and Issues

Author

Listed:
  • Adam McCarty

    (Institute of Social Studies, The Hague)

Abstract
This report follows up on a 1996 UNDP survey of microfinance activity in Vietnam. The need was not simply because of the five-year time lapse, but also because the larger multilateral donors were showing interest in funding microfinance activity, and it was therefore a good time to survey the sector and identify strategic issues and "lessons learned" for their benefit. This report had highlighted a number of problems concerning microfinance in Vietnam. These concerns, however, should not cloud the general picture of substantial progress during the past decade. The move by the government to allocate significant funds for the rural banking system is the most notable achievement. The government has also been active in developing experiments with new forms of credit cooperatives, and it is now seeking to mobilise savings through post offices. The missing element is the lack of a clear legal status and a prudential regulatory framework to encourage development of the non-state sector to provide microfinance services. The lack of institutional support has frustrated the NGO community. The conditions of “social capital” in Vietnam are ripe for the rapid expansion of microfinance schemes along the lines of those in Indonesia and Bangladesh . But the NGO schemes have also constrained themselves. NGO activity in microfinance may be characterised as “variations around a theme”, that theme being an acquiescence to government interest rate policies and a subsequent neglect of savings mobilisation. There are exceptions, but they are few, and there are many more schemes that are just “door opening” subsidies for other project objectives. There is a need for some schemes to aggressively strive for financial sustainability based upon mobilising savings. The donor community in general has relatively neglected Microfinance. The multi-lateral and some bilateral donors are showing renewed interest, but only in recent years. There is great scope for expansion into Vietnam’s segmented and inefficient rural financial markets. A detailed understanding of these markets, and in particular the role of the government banks, is needed to guide scheme designs and to enable targeting of the poor. A pro-active Microfinance Forum could play a central role in the whole process, both as a source of information and research, and as a focal point for policy advocacy.

Suggested Citation

  • Adam McCarty, 2001. "Microfinance in Vietnam - A Survey of Schemes and Issues," Finance 0110001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpfi:0110001
    Note: Type of Document - ; pages: 39; figures: included. Survey commissioned by the British Department of International Development (DFID) and the State Bank of Vietnam (SBV).
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    References listed on IDEAS

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    Cited by:

    1. Kieran Donaghue, 2004. "Microfinance in the Asia Pacific," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 18(1), pages 41-61, May.
    2. Thomas Dufhues & Franz Heidhues & Gertrud Buchenrieder, 2004. "Participatory Product Design by Using Conjoint Analysis in the Rural Financial Market of Northern Vietnam," Asian Economic Journal, East Asian Economic Association, vol. 18(1), pages 81-114, March.
    3. Mai, Nhat Chi, 2013. "Essays on Farm Household Decision-Making: Evidence from Vietnam," OSF Preprints 96azx, Center for Open Science.
    4. Nguyen, Cuong & Van den Berg, Marrit, 2008. "The impact of Micro-credit and Informal Credit on Poverty and Inequality in Vietnam," MPRA Paper 107151, University Library of Munich, Germany.
    5. Dufhues, Thomas & Buchenrieder, Gertrud, 2005. "Outreach of credit institutes and households' access constraints to formal credit in Northern Vietnam," Research in Development Economics and Policy (Discussion Paper Series) 8535, Universitaet Hohenheim, Department of Agricultural Economics and Social Sciences in the Tropics and Subtropics.
    6. Thi Thu Tra Pham & Robert Lensink, 2008. "Household Borrowing in Vietnam," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 7(3), pages 237-261, December.
    7. Sougata Ray & Sushanta Mahapatra, 2016. "Penetration of MFIs among Indian states: an understanding through macro variables," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 15(3), pages 294-305, September.
    8. Uduakobong Inyang, 2022. "Risks to credit access in a developing economy:Focus on household characteristics and the choice of credit in the Niger Delta Region of Nigeria," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(2), pages 228-240, March.
    9. Khoi, Phan Dinh & Gan, Christopher & Nartea, Gilbert V. & Cohen, David A., 2013. "Formal and informal rural credit in the Mekong River Delta of Vietnam: Interaction and accessibility," Journal of Asian Economics, Elsevier, vol. 26(C), pages 1-13.
    10. Dinh Khoi Phan & Christopher Gan & Gilbert V. Nartea & David A. Cohen, 2014. "The impact of microcredit on rural households in the Mekong River Delta of Vietnam," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(4), pages 558-578, October.
    11. Cuong Viet Nguyen & Marrit Berg, 2014. "Informal Credit, Usury, or Support? A Case Study for Vietnam," The Developing Economies, Institute of Developing Economies, vol. 52(2), pages 154-178, June.
    12. Thi Thu Tra Pham & Robert Lensink, 2006. "The Determinants of Loan Contracts to Business Firms: Empirical Evidence from a Private Bank in Vietnam," WIDER Working Paper Series RP2006-86, World Institute for Development Economic Research (UNU-WIDER).
    13. Ta Nhat Linh & Hoang Thanh Long & Le Van Chi & Le Thanh Tam & Philippe Lebailly, 2019. "Access to Rural Credit Markets in Developing Countries, the Case of Vietnam: A Literature Review," Sustainability, MDPI, vol. 11(5), pages 1-18, March.
    14. repec:ilo:ilowps:386000 is not listed on IDEAS
    15. Mikkel Barslund & Finn Tarp, 2006. "Rural Credit in Vietnam," Discussion Papers 06-03, University of Copenhagen. Department of Economics.
    16. Thi Lan, Le. & Tran, Nhu-An., 2005. "Towards a viable microfinance sector in Viet Nam : issues and challenges," ILO Working Papers 993860003402676, International Labour Organization.
    17. Nghiem, Son & Laurenceson, James, 2006. "NGO Microfinance in Vietnam: Stakeholders' Perceptions of Effectiveness," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25594, International Association of Agricultural Economists.
    18. Thi Kieu Van Tran & Ehsan Elahi & Liqin Zhang & Muhammad Abid & Quang Trung Pham & Thuy Duong Tran, 2018. "Gender differences in formal credit approaches: rural households in Vietnam," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 32(1), pages 131-138, May.
    19. Khac Linh Bui & Thanh Hang Bui, 2022. "Does Rural Credit Mediate Vulnerability Under Idiosyncratic and Covariate Shocks? Empirical Evidence from Vietnam Using a Multilevel Model," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(1), pages 172-224, February.
    20. Thi Thu Tra Pham & Robert Lensink, 2007. "Lending policies of informal, formal and semiformal lenders," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15(2), pages 181-209, April.

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    Keywords

    microfinance; Vietnam;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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