Abstract

In this paper, the author develops an econometric framework to analyze the effect of access to credit on the economic
welfare of households in Vietnam. The findings confirm that household credit contributes positively and significantly
to the economic welfare of households in terms of per capita expenditure, per capita food expenditure and per
capita non-food expenditure. The positive effect of credit on household economic welfare is observed regardless
of whether they are poor or better-off households. The author also finds that credit has a greater positive effect on
the economic welfare of poorer households and finds that the age of the household head, the household size, land
ownership, and savings and the availability of credit at village level are key factors that affect household
borrowing. Some policy implications are drawn.