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Purpose The purpose of this paper is to investigate borrowing motivation, credit access barriers and their impacts on income of smallholder farmers engaging in cinnamon value chain development in Northwestern Vietnam. Design/methodology/approach A multistage sampling technique using a structural questionnaire and in-depth interviews was applied for collecting primary data from farmers and relevant stakeholders. The Propensity Score Matching was employed to analyze access barriers and examine whether relaxing these barriers can improve farmer income. To deal with the issue of model uncertainty and further increase the robustness of results, Bayesian model average and the bootstrapping approach were applied. Findings To fulfill the certain quality standards of cinnamon products which are later used in the medicinal and food industry, farmers as primary producers need credit for intensive investment to increase the value of their products. Still, there are 25.36 percent of farmers who have access constraints to formal credit. In the credit received group, 24.56 percent have not received full credit as demanded. Access problems are relevant to lack of collateral, lack of bank account holdings, inconvenient access to roads, weak chain linkage and limited organic farming. Removing credit access barriers can improve the income for farmers from cinnamon farming activities. Research limitations/implications More detailed information on the conditions under which credit serves a more important role in creating value addition for cinnamon products can help the government establish more effective credit policies. Social implications Great attention should be paid to smallholder farmers as primary producers in the chain for sustainable value chain development in developing and emerging economies. Policy interventions should facilitate access to bank accounts, speed up the process of granting residential land use certificates, certify organic farming and upgrade the road system. Strengthening the chain linkage can enhance smallholder farmers’ capacity to obtain credit through value chain lending development. Originality/value Empirical studies on agricultural credit from the perspective of value chain development remain scarce. A better understanding of credit access constraints allows for the positing of recommendations for policy makers to facilitate value chain lending and a medicinal plant-based agro-forestry system in similar situations.

Purpose The purpose of this paper is to explore the existence and determinants of the credit gap in the cinnamon value chain development in Northwestern Vietnam. Design/methodology/approach A multi-stage sampling of 548 cinnamon households and a Heckman Selection Model were applied to examine their credit access constraints. In-depth interviews with cooperatives, enterprises, banks and relevant government agencies were further conducted to explain the credit gap. Findings In the total 52.74 percent of households that received credit, 24.56 percent of them received an insufficient amount of credit as registered. In addition, 35.77 percent of total households are credit rationed. Although all enterprises and cooperatives had been successful in applying for credit as long as they have collateral, none of them received the full credit amount requested. The credit amount received satisfied 80.64, 43.03 and 44.28 percent of the demand by households, cooperatives and enterprises, respectively. The lack of valuable collateral assets is the most important factor explaining this credit gap. Moreover, membership in a farmer-based union or ownership of a bank account increases the probability of access to credit. Educated household heads with a larger farm size and the Kinh ethnic majority are positively associated with a larger amount of credit. Households with conventional cinnamon farming, more dependents and union non-membership are more likely to be credit rationed. Practical implications A reform on collateral management, facilitating access to bank accounts, capacity building for local farmer-based unions, organic certification, granting land use rights and facilitating a platform to share reliable information between relevant actors are needed to bridge the credit gap. Originality/value This paper analyses the determinants of credit access constraints by key actors in a medicinal plant value chain that was insufficiently discussed by previous studies in the field.

Using case studies of the bamboo and cinnamon value chains in rural areas of northern Vietnam, this paper contributes to the existing literature by analyzing barriers and suggests conditions under which value chain lending would be an effective tool for improving smallholder farmers’ access to credit. A mixed method using both in-depth interviews with relevant stakeholders and a two-stage Heckman model is employed to explain the existing credit gap. Findings show that in both chains, bank decision-making on lending is typically limited to individual chain actors instead of considering the whole chain. Commercial banks predominately use conventional lending approaches heavily dependent on collateral which typically results in a shortage of credit available to the chain actors. Value chain lending is constrained by weak chain linkages and limited ownership of private bank accounts. Drawing from these cases in Vietnam, the article concludes by arguing that status quo value chain lending in lower-income countries merits considerable rethinking. The lending approaches of banks require innovation to ‘think beyond collateral’ in improving chain cohesion. Multi-stakeholder partnerships are important for successful value chain lending. In addition, farmer-based unions have the potential to address issues of information asymmetry in the credit market.

The failure to transform heritage into assets is one of the main constraints for community-based tourism development. This article shows how access to bank credit contributes to income enhancement among ethnic minorities involving community-based tourism homestays. A multistage sampling technique and direct interviews using questionnaires were used to collect a rich dataset of a total 262 homestays in Northwestern Vietnam. To deal with model uncertainty, the approach of double-selection lasso logistic regression applied to Propensity Score Matching was used. Results show that credit recipients increased their total income level from US$180.11 to US$228.58 with an average of US$194.63 compared to non-recipients based on four different matching algorithms. The results suggest that the provision of bank credit should be expanded to enhance income for homestays. To facilitate homestay access to bank credit, stronger collaboration between homestays and travel agencies, better access to training and the adoption of a mobile-based banking platform by homestays are all needed. Smartphone-based credit services to homestays have the potential to reduce transaction costs of accessing credit for mountainous regions. Results imply that heritage can serve as productive assets via financial leverage.

The volume of literature recognizing the importance of rural credit in developing countries has grown significantly in recent years. However, previous studies have mainly assumed that credit has a homogeneous impact on recipients. This paper contributes to the literature by further examining the impacts of credit on different groups of accessed households categorized by relative poverty, loan volumes, access to agricultural extension services and ethnicity in Vietnam. This paper uses data of 1338 households collected from the Vietnam Access Resources Household Survey in 2012. To increase the reliability of estimation measures, the distribution for the impact estimator is further constructed by applying the bootstrapping approach to the Propensity Score Matching. Results show that credit access affects recipient groups heterogeneously. Although there is strong evidence of positive impacts on non-farm income, credit has no effect on farm income, even for recipients with more annual visits to agricultural extension. While credit significantly increases total income, per capita income, and nonfarm income of the Kinh majority, it has little to no impact on those income components of ethnic minorities. Credit tends to have significantly positive impacts on household income of the better-off, the richest and those receiving larger credit volumes. Results imply that households with favorable economic conditions tend to benefit from accessing rural credit.

This study uses the Propensity Score Matching to examine the income impact of different credit sources on accessed households in the Northern Mountains of Vietnam. Results show that overall rural credit serves an important role in improving household income with respect to total income, per capita income and nonfarm income. However, different credit affects recipients heterogeneously. Whereas a significant increase in household income can be achieved through accessing commercial and informal loans, there is no significant increase of all income components associated recipients of preferential credit. These results imply that a successful credit scheme needs to consider variations in transaction costs, disbursement scheme, loan characteristics and typical socio-economic conditions of credit recipients.