Does credit access affect household income homogeneously across different groups of credit recipients? Evidence from rural Vietnam

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.