Economics and management of national economy

Credit constraint and household income: a quantile analysis approach

Economic Annals-XXI

Economic Annals-ХХI: Volume 164, Issue 3-4, Pages: 49-52

Citation information:
Hoang Tran Hau (2017). Credit constraint and household income: a quantile analysis approach. Economic Annals-XXI, 164(3-4), 49-52. doi: https://doi.org/10.21003/ea.V164-11

View Full-TextDownload PDF

Hoang Tran Hau
PhD (Finance),
Associate Professor,
Institute of Financial Training
4 Hang Chuoi Lane 1 Str., Hai Ba Trung District, Hanoi, Vietnam
hoangtranhau.ift@gmail.com
ORCID ID: http://orcid.org/0000-0002-0219-975X

Credit constraint and household income: a quantile analysis approach

Abstract. Using a quantile regression approach, this study contributes to the literature by analyzing the first time of role of credit constraints on household income in Vietnam. Using the latest version of Vietnam household living standard survey in 2016, our results show a negative impact of credit constraint on income of household when using OLS. Whereas using a quantile approach, a negative impact of credit constraint on household income is still recorded, the linkage shows a decreasing trend of the impact of credit constraint on income through various points of income distribution. These results might suggest that access to household microfinance can be a way to help Vietnam improve in their welfares.

Keywords: Credit Constraints; Quantile Regression; Vietnam; Household Income

JEL Classification: C14; C21; H81

Acknowledgment. This research is funded by Vietnam National Foundation for Science and Technology Development (NAFOSTED) under grant number II5.3-2013.04.

DOI: https://doi.org/10.21003/ea.V164-11

References

  1. Aghion, B. A., De, & Morduch, J. (2010). The economics of microfinance. (2nd ed.). London, Cambridge: The MIT press.
    Retrieved from https://mitpress.mit.edu/sites/default/files/titles/content/9780262513982_sch_0001.pdf
  2. Barnett, B. (2011). The Economics of Microfinance by Beatriz Armendariz and Jonathan Morduch Review. The Cato Journal, 31(1), 166-171.
    Retrieved from https://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2011/1/cj31n1-13.pdf
  3. Barslund, M., & Tarp, F. (2008). Formal and informal rural credit in four provinces of Vietnam. The Journal of Development Studies, 44(4), 485-503.
    doi: https://doi.org/10.1080/00220380801980798
  4. Bitler, M. P., Gelbach, J. B., & Hoynes, H. W. (2008). Distributional impacts of the self-sufficiency project. Journal of Public Economics, 92(3), 748-765.
    doi: https://doi.org/10.1016/j.jpubeco.2007.07.001
  5. Cameron, A. C., & Trivedi, P. K. (2009). Microeconometrics using stata: Revised Edition. (2nd ed.). College Station, Texas: Stata Press.
  6. Coleman, B. E. (1999). The impact of group lending in Northeast Thailand. Journal of development economics, 60(1), 105-141.
    doi: https://doi.org/10.1016/S0304-3878(99)00038-3
  7. Coleman, B. E. (2006). Microfinance in Northeast Thailand: Who benefits and how much? World development, 34(9), 1612-1638.
    doi: https://doi.org/10.1016/j.worlddev.2006.01.006
  8. Cuong, N. V. (2008). Is a govermental micro-credit program for the poor really pro-poor? Evidence from Vietnam. The Developing Economies, 46(2), 151-187.
    doi: https://doi.org/10.1111/j.1746-1049.2008.00061.x
  9. Dammert, A. C. (2009). Heterogeneous impacts of conditional cash transfers: evidence from Nicaragua. Economic Development and Cultural Change, 58(1), 53-83.
    doi: https://doi.org/10.1086/605205
  10. Aghion, Ph., & Aghion, B. A., De (2004). Croissance endogene et reduction de la pauvrete. Economie Internationale, 100(4), 27-38.
    Retrieved from http://www.cairn.info/revue-economie-internationale-2004-4-page-27.htm (in French)
  11. Deaton, A. (1997). The analysis of household surveys: a microeconometric approach to development policy. Washington, D.C.: World Bank Publications.
    Retrieved from http://documents.worldbank.org/curated/en/593871468777303124/The-analysis-of-household-surveys-a-microeconometric-approach-to-development-policy
  12. Djebbari, H., & Smith, J. (2008). Heterogeneous impacts in PROGRESA. Journal of Econometrics, 145(1-2), 64-80.
    doi: https://doi.org/10.1016/j.jeconom.2008.05.012
  13. Doan, T., Gibson, J., & Holmes, M. (2014). Household credit for the poor and child schooling in peri-urban Vietnam. International Development Planning Review, 36(4), 455-474.
    doi: https://doi.org/10.3828/idpr.2014.25
  14. Elahi, K. Q., & Danopoulos, C. P. (2004). Microcredit and the Third World: Perspectives from moral and political philosophy. International Journal of Social Economics, 31(7), 643-654.
    doi: https://doi.org/10.1108/03068290410540855
  15. Islam, A. (2007, July 3-6). Using non-experimental methods to evaluate the impact of microfinance: Evidence from Bangladesh. A speech at the Australian Meeting of the econometric society. Queensland, Australia.
    Retrieved from https://www.researchgate.net/publication/228992151_Using_Non-Experimental_Methods_To_Evaluate_The_Impact_of_Microfinance_Evidence_From_Bangladesh
  16. Eravadeekul, A. (2013). The household at-risk in Thailand: The quantile regression analysis over average propensity to consume and debt servicing burden. Faculty of economics (EBA) senior research course No. 2952499. Chulalongkorn University.
    Retrieved from http://www.eba.econ.chula.ac.th/PDF/research/Apinya%20Eravadeekul.pdf
  17. Freeman, H. A., Ehui, S. K., & Jabbar, M. A. (1998). Credit constraints and smallholder dairy production in the East African highlands: application of a switching regression model. Agricultural Economics, 19(1-2), 33-44.
    doi: https://doi.org/10.1016/S0169-5150(98)00044-9
  18. Gibbons, D., Quinones, B., Remenyi, J., & Seibel, H. (2000). Microfinance for and by the Poor: Lessons from Experience. In Remenyi, J., & Quinones, B., (Eds.). Microfinance and Poverty Alleviation: Case Studies from Asia and the Pacific (pp. 253-269). Pinter, London and New York,
  19. Grawe, N. D. (2001). In Search of Intergenerational credit constraints among Canadian men: Quantile versus mean regression tests for binding credit constraints. Analytical Studies Branch, Statistics Canada.
  20. Jia, X., Heidhues, F., & Zeller, M. (2010). Credit rationing of rural households in China. Agricultural Finance Review, 70(1), 37-54.
    doi: https://doi.org/10.1108/00021461011042620
  21. Kumar, C. S., Turvey, C. G., & Kropp, J. D. (2013). The impact of credit constraints on farm households: Survey results from India and China. Applied Economic Perspectives & Policy, 35(3).
    doi: https://doi.org/10.1093/aepp/ppt002
  22. Khandker, S. R. (1998). Fighting poverty with microcredit: experience in Bangladesh. New York: Oxford University Press.
    Retrieved from http://documents.worldbank.org/curated/en/549951468768619206/Fighting-poverty-with-microcredit-experience-in-Bangladesh
  23. Khandker, S. R. (2005). Microfinance and poverty: Evidence using panel data from Bangladesh. The World Bank Economic Review, 19(2), 263-286.
    doi: https://doi.org/10.1093/wber/lhi008
  24. Koenker, R., & Hallock, K. (2001). Quantile regression: An introduction. Journal of Economic Perspectives, 15(4), 43-56.
    doi: https://doi.org/10.1257/jep.15.4.143
  25. Li, X., Gan, C., & Hu, B. (2011). The welfare impact of microcredit on rural households in China. The Journal of Socio-Economics, 40(4), 404-411.
    doi: https://doi.org/10.1016/j.socec.2011.04.012
  26. MkNelly, B., & Dunford, C. (1998). Impact of credit with education on mothers and their young children’s nutrition: Lower Pra Rural Bank credit with education program in Ghana. Freedom from Hunger Research Paper, 4, 1-5.
  27. MkNelly, B., & Dunford, C. (1999). Impact of credit with education on mothers and their young children’s nutrition: CRECER credit with education program in Bolivia. Freedom from Hunger Research Paper, 5.
  28. Nghiem, H. S., & Laurenceson, J. (2005). The nature of NGO microfinance in Vietnam and stakeholders’ perceptiveness, East Asia Economic Research Group, Discussion Paper No. 3. Queensland University.
  29. Rui, L., & Xi, Z. (2010). Econometric analysis of credit constraints of Chinese rural households and welfare loss. Applied Economics, 42(13), 1615-1625.
    doi: https://doi.org/10.1080/00036840701721604
  30. Sebu, J. (2012). Decomposition analyses of credit constraint and household consumption inequality in Malawi.
    Retrieved from https://www.kent.ac.uk/economics/phd-job-market/Working%20papers/joshua-sebu.pdf
  31. Tran, M. C., Gan, C. E., & Hu, B. (2016). Credit constraints and their impact on farm household welfare: Evidence from Vietnam’s North Central Coast region. International Journal of Social Economics, 43(8), 782-803.
    doi: https://doi.org/10.1108/IJSE-11-2014-0243
  32. Yamauchi, C. (2005). Evaluating Poverty Alleviation through Microcredit: Methodological and Empirical Evidence from Indonesia. Job Market Paper, 1-42.

Received 5.04.2017

View Full-TextDownload PDF
In, , ,

More Papers