Credit and Ethnic Consumption Inequality in the Central Highlands of Vietnam

authored by: Thanh-Tung Nguyen, Trung Thanh Nguyen, Ulrike Grote
Abstract: Credit is commonly considered an important instrument to relieve financial capital constraints of poor households and subsequently to improve their welfare. However, the empirical impact of credit on consumption inequality remains ambiguous. We use a 2-year panel dataset collected in Daklak, a province in the Central Highlands of Vietnam, to investigate the differences in access to credit and its impact on household consumption and consumption inequality between ethnic groups. Our results show that the differences in access to credit and in its impacts on household consumption between the ethnic majority and the migrant ethnic minority groups are insignificant. However, households from the indigenous ethnic minority group face more disadvantages in accessing formal credit and rely more on informal credit than those from the ethnic majority. They also face a higher collateral ratio and the amount of formal loans they could access is lower. The impact of formal credit on consumption of the majority is also higher than that of the indigenous minority, consequently causing a significant increase in consumption inequality between the ethnic groups. Our findings call for assistance programs to support indigenous households to improve their access to formal credit as well as to enhance the effectiveness of these loans.
Organisation(s): Institute of Environmental Economics and World Trade
Type: Article
Journal: Social Indicators Research
Volume: 148
Pages: 143-172
No. of pages: 30
ISSN: 0303-8300
Publication date: 02.2020
Publication status: Published
Peer reviewed: Yes
ASJC Scopus subject areas: Developmental and Educational Psychology, Arts and Humanities (miscellaneous), Sociology and Political Science, General Social Sciences
Sustainable Development Goals: SDG 10 - Reduced Inequalities
Electronic version(s): https://doi.org/10.1007/s11205-019-02202-z (Access: Closed)