Lending policies of informal, formal and semiformal lenders - Evidence from Vietnam

Thi Thu Tra Pham, Robert Lensink*

*Bijbehorende auteur voor dit werk

    OnderzoeksoutputAcademicpeer review

    30 Citaten (Scopus)


    This paper compares lending policies of formal, informal and semiformal lenders with respect to household lending in Vietnam. The analysis suggests that the probability of using formal or semiformal credit increases if borrowers provide collateral, a guarantor and/or borrow for business-related activities. The probability of using informal credit increases for female borrowers. It also appears that the probability of using formal credit increases in household welfare up to a certain threshold, but at a decreasing rate. In addition, the paper discerns the determinants of probability of default across lender types. Default risk of formal credit appears to be strongly affected by formal loan contract terms, e.g., loan interest rate and form of loan repayment, whereas default risk on informal loans is significantly related to the presence of propinquity and other internal characteristics of the borrowing household. Overall, the study raises several important implications for the screening, monitoring and enforcement instruments that may be employed by different types of lenders.

    Originele taal-2English
    Pagina's (van-tot)181-209
    Aantal pagina's29
    TijdschriftEconomics of Transition
    Nummer van het tijdschrift2
    StatusPublished - 2007

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