Thesis Public Defense | VNP28 - Lê Thùy Trang

Impact of credit access on farmers’ investment behavior in Vietnam

Student: Lê Thùy Trang, VNP-28

Supervisor: Dr. Trương Đăng Thụy, Dr. Matthias Rieger

Abstract:

 Agricultural credit is regarded as a crucial factor in economic development. Despite the importance of agricultural credit to developing countries, little is known about how such credit impacts rural household, especially in Vietnam. This thesis conducts an empirical analysis of the impact of agricultural credit on farm outcomes and household investment by employing VARHS panel data. In order to do this, we make a comparison between ordinary least squares and fixed effects method to choose the best effective method to control for unobserved heterogeneity. Then, we run multiple linear regression and find consistent evidence that access to credit leads to a growth in farm production and profit and in household welfare. Furthermore, we also provide potential channels through which credit access affects agricultural profit by analyzing the impact of credit on farm investment and conclude that credit improves farm outcomes through farm inputs and land expansion.

Key words: credit, fixed effects, rural households, Vietnam.

JEL Classification: Q12, Q14