tailieunhanh - Effects of social capital on credit access of farming households in Vietnam

Social capital is considered as an influential factor in economic transactions, including credit access. The research aims at testing relationships between components of social capital and credit access in Vietnam’s rural areas. | 2 | Nguyễn Trọng Hoài & Trần Quang Bảo | 02 - 18 Effects of Social Capital on Credit Access of Farming Households in Vietnam NGUYỄN TRỌNG HOÀI University of Economics HCMC - hoaianh@ TRẦN QUANG BẢO Vung Tau Imex Garment Joint Stock Company - tqb1977@ ARTICLE INFO ABSTRACT Article history: Received: July 8, 2013 Received in revised form Nov. 12, 2013 Accepted: M arch 31, 2014 Social capital is considered as an influential factor in economic transactions, including credit access. The research aims at testing relationships between components of social capital and credit access in Vietnam’s rural areas. The testing is conducted with binary logistic and multinomial logistic regression models. The results show that formal social network reduces possibility of getting access to formal credit, and households with wider formal social networks are likelier to belong to the group with access to semi-formal credit than the group with access to formal credit. Such conflicting results may come from specific characteristics of credit market in Vietnam’s rural areas. Keywords: social capital, formal credit, semi-formal credit, informal credit, binary logistic regression, multinomial logistic regression. JED April 2014| 3 1. INTRODUCTION Social capital (SC) refers to “the mutual relations, interactions, and networks that emerge among human groups” (Wall et al., 1998). Researchers have discovered impacts of social networks on economic behaviors from different aspects. Presence of social networks increases farmers’ ability to apply new techniques (Munshi, 2004; Conley & Udry, 2008). According to Gomez & Santor (2001), to self-employed small-size businesses, higher levels of social network may lead to higher income. Munshi (2003) shows that social networks may reduce job searching cost, thereby lowering information asymmetry that affects individuals in the labor market. Regarding rural financial market, many researches, especially in .