The impact of the Vietnam Bank for Social Policies preferential credit on household welfare in Vietnam: a panel data analysis

PurposeThis study aims to examine the impact of the preferential credit (represented by loan volume and duration) provided by the Vietnam Bank for Social Policies on household welfare (represented by household income and consumption) in Ninh Binh province, Vietnam. It also identifies and ranks the barriers of accessing the credit.Design/methodology/approachThe study applies fixed-effects method to handle the panel data to examine the impact of the credit on poverty reduction. It also uses face-to-face interviews and group discussions to identify and rank the barriers of accessing to the credit.FindingsThe results show that the loan volume significantly helps improve household income, but does not help improve household consumption. For example, a 1% increase in the loan volume is associated with an increase of almost 0.69% in household income, significant at the 1% level. In addition, the loan duration does not help improve household welfare. The major barriers of accessing the credit include the time spent to get to the nearest bank branch and the transparency of household poverty status assessment.Research limitations/implicationsData are collected in three years, the number of the sample limits at 300 households. A few variables are not included in the models due to resource limitation for data collection or the nature of the study method.Practical implicationsThe Vietnam Bank for Social Policies preferential credit may need to increase the loan volume to significantly help improve household welfare, hence reduce poverty. In addition, barriers of accessing the credit such as bank coverage and the household poverty status assessment should be eliminated so that more households, including poor ones, can have a better access.Social implicationsThe Vietnam Bank for Social Policies preferential credit can help to improve household welfare, hence ease household poverty status. To help the credit reach more people, accessing barriers such as bank coverage and the household poverty status assessment should be eliminated.Originality/valueThis is the first study that has examined the impact of the Vietnam Bank for Social Policies preferential credit on household welfare and identified barriers of accessing the credit. The quantitative analysis uses a panel data set constructed from 300 face-to-face interviews with households located in one city and two districts in Ninh Binh province during 2016–2018 and applied the fixed-effects method to examine the impact of the credit on household welfare. The qualitative analysis uses in-depth interviews and group discussion with key persons and related parties to identify barriers of accessing the credit.