Effects of microcredit programs on household financial portfolios: Evidence from rural Vietnam

Although microcredit is generally regarded as an excellent instrument for assisting borrowers in improving their well-being, its contribution to improving family financial status is often overlooked. This study addresses this issue by examining the effects of microcredit programs in Vietnam on household financial portfolios. We utilize a balanced panel dataset of 1157 identical households from two Vietnamese provinces collected in 2016, 2017, and 2022. The estimated results are calculated using the multivariate Tobit method and the instrumental variable regression method. The findings prove that microcredit increases households' lending, savings, and investments. The results are consistent with the conceptual framework and robust to different econometric models and samples. The study suggests some policy implications based on its findings.