The results of the second CFA analysis of the indicators measuring the
appropriateness of the model show that Chi-quare/df = 2.201 < 3, TLI = 0.967, CFI =
0.974, GFI = 0.948, which are all greater than 0.9, the RMSEA value = 0.046 < 0.05,
so the model is suitable for the market. Also all AVE values > 0.5, the reliability of
aggregated>0.7, scale reliability is guaranteed, distinctness is guaranteed AVE >MSV.
P-value coefficients of observed variables representing the factors are <0.5, these
observed variables have the ability to represent the factors in the CFA model. Thus, it
can be confirmed that the scale achieves convergence and unidirectional values.
Therefore, the research scales for individual business households accessing informal
credit have satisfied analytical requirement
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ndividual business households in Vietnam.
3.2. Research question
The research aims to answer the following questions:
- What is included in the theoretical framework that the research uses?
- What is the current status of credit access of individual business households in
Vietnam?
- How these factors: “Expected effect”, “Effort to expect”, “Favorable
conditions”, “Social impact”, “Convenience”, “Financial literacy”, “Security” impact
on the credit access of individual business households in Vietnam?
- What are the policy implications to promote access to formal credit and limit
the use of loan sharking by individual business households in Vietnam?
4. Research subject and research scope
The research subjects are: access to credit by individual business households in
Vietnam - which is divided into formal credit access and informal credit access. In
informal credit, the author focuses on access to loan sharking by individual business
households. The thesis does not study the semi-formal credit.
Research Scope: The research focuses on individual business households with
business registrations across the country.
Respondents: owners of individual businesses.
Research period: The study is conducted from 2017 - 2020, in which the survey
framework is from March 2019 to November 2019.
5. Approach
This research approaches on 2 directions at the same time (1) the possibility
that individual business households can obtain loans, both formal and informal; (2)
Financial Inclusion.
CHAPTER 1:
Theoretical basis for credit access of individual business households and
affecting factors
1.1. Overview of individual business households and credit access of
individual business households
1.1.1. Overview of individual business households
A business household owned by an individual who is a Vietnamese citizen, or a
group of individuals who are at least 18-year-old Vietnamese citizen. They need to have
full capacity for civil acts, or be owned by a household, register bussiness in one location
only, employ no more than ten employees and take full responsibility with assets for the
businessfor its business.
1.1.2. Formal credit and informal credit
Formal credit is a service provided by licensed credit institutions, for example
credit services provided by banks, finance companies, finance leasing companies, etc.
Informal credit is generally understood as the forms of borrowing outside the
management and supervision of the financial and monetary authorities, including loans
from individuals, loans through the form of tontine, or loan from family, friends or
relatives.
1.1.3. Credit access
Access to formal credit means that people, households, and business households
know and can get loans from credit institutions. In other words, this is a form of asset
transactions between the credit institutions-called the lender- and the other party is the
individuals and enterprises, called the borrower. In terms of informal credit access, it
can be understood that individual business households would use credit services not
provided by licensed credit institutions or socio-political organizations. This is almost
the same as using loan sharking.
1.2. Effects of credit access on individual business households
1.2.1. Positive effects
1.2.1.1. From formal credit
Access to credit institutions has provided borrowers with opportunities to create
livelihood capacity and promote their self-ownership.
1.2.1.2. From informal credit
Informal credit (and even loan sharking) is not always completely bad because
it allows people in need of capital to borrow immediately, with simple procedures,
meeting the urgent needs of borrowers.
1.2.2. Negative effects
1.2.1.1. From formal credit
Formal credit would increase the costs of individual business households in the
early stages, because of the requirements for proof of income, and reports proving the
solvency.
1.2.1.2. From informal credit
The consequences of loan sharking are very serious (for developed countries,
informal credit and loan sharking are identified as one), and therefore it is necessary to
prevent and limit loan sharking as much as possible, in order to ensure social stability,
protect customers. Studies have mentioned the negative effects of loan sharking on
many sites, focusing on economic security, living standards of the population, social
security and order, etc.
1.3. Foundation theory and expected model
1.3.1. Foundation theories
1.3.1.1. Theory of Reasoned Action (TRA)
1.3.1.2. Theory of Planned Behavior (TPB)
1.3.1.3. Technology Acceptance Model (TAM)
1.3.1.4. Unified Theory of Acceptance and Use Technology (UTAUT)
1.3.2. Expected research model
1.3.1.1. Choosing theory as research foundation
This thesis approaches the fundamental model which is the TPB model and adds
additional data in the research of UTAUT.
1.3.2.2. Building preliminary research model
For the first model, as for the formal credit approach, the author used the TPB
model to evaluate, which combined with the UTAUT model to give the dependent
variables. For the second model, the author builds the model with four main factors:
“Expected effect”, “Expected effort”, “Social influence”, “Favorable conditions” like
the original theoretical model. In addition, the UTAUT model also takes into account
the following factors: “Age”, “Gender”, “Experience of using” and “Voluntary use”.
CHAPTER 2:
RESEARCH METHOD AND RESEARCH MODEL
2.1. Research Methods
2.1.1. Research process
This research uses both qualitative and quantitative methods to answer the
research question. Qualitative research methods used in the development of
questionnaires and scales and quantitative research methods used after qualitative
research has been completed and questionnaire has been adjusted.
2.1.2. Qualitative research
Qualitative research objectives: To test, refine and determine relationships
between variables in the original theoretical model (which was established based on
theoretical review research).
Qualitative research method: In-depth interview, because this is the most
appropriate way to check the suitability of the proposed research model, build the
survey questionnaire and the appropriateness of research results.
2.1.3. Quantitative research
Research quantitatively by collecting data from surveys on the target group of
households that have used formal and/or informal credit (excluding loans from
relatives or loans from tontine). The author processes the data using SPSS 25 and
AMOS 20 software to analyze individual business household characteristics, scale
reliability, Exploratory factor analysis (EFA), Confirmatory factor analysis (CFA),
Structural equation modeling (SEM), the influence of moderator variables on the
relationship of structural model.
2.2. Research model and research hypothesis
2.2.1. Model of formal credit access
2.2.1.1. Collateral
2.2.1.2. Income
2.2.1.3. Business experience of the owners of household (KNCH)
2.2.1.4. Distance (KC)
2.2.1.5. Loan interest rate (LS)
2.2.1.6. Loan procedure (TTV)
2.2.1.7. Experience of commercial bank (KNNH)
2.2.1.8. Electronic banking services (NHDT)
2.2.1.9. Ability of individual business households to access bank credit
2.2.2. Model of informal credit access
2.2.1.1. Expected effect
2.2.2.2. Expected effort (NOLUC)
2.2.2.3. Social influence (XAHOI)
2.2.2.4. Favorable conditions
2.2.2.5. Financial literacy (HIEUBIET)
2.2.2.6. Convenience
2.2.2.7. Security (BAOMAT)
2.2.2.8. Intend to use informal credit
CHAPTER 3:
RESEARCH RESULTS
3.1. Overview of Vietnamese individual business households and credit
access of individual business households
3.1.1. Situation of individual business households in Vietnam
Table 3.1. Individual business households in Vietnam divided by regions
Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Red river delta 1,093.1 1,113.9 1,233.8 1,183.4 1,2132 1,228.0 1,256.7 1,330.1 1,324.377 1,357.069
Northern
Midlands and
Mountains
369.6 380.4 430.4 423.2 436.3 440.3 450.6 487.1 481.628 493.655
Central 945.4 979.4 1,054.0 1,045.2 1,062.8 1,095.9 1,126.1 1,184.3 1,201.809 1,233.100
Central
Highlands 181.1 187.8 213.8 219.5 229.9 226.4 2,366.5 245.7 252.844 271.945
South East 664.8 672.0 748.9 752.2 779.9 820.1 856.3 900.9 942.680 978.384
Mekong River
Delta 871.0 902.8 947.9 912.5 935.6 944.1 983.6 994.5 995.397 1,045.242
Total 4,125.0 4,236.3 4,628.8 4,536.0 4,657.7 4,754.8 4,909.8 5,142.6 5,198.735 5,379.395
Source: General Statistics Office (2020)
Individual business households are distributed relatively evenly across the
country. In which, the Red River Delta, Central, Mekong River Delta and Southeast
are the regions with the highest proportion, at 25.86%; 23.03%; 19.34% and 17.52%
respectively. The Northern Midlands and Mountains and the Central Highlands
accounted for the lowest proportions, at 9.47% and 4.78% of the total number of
households, respectively. Based on population distribution, the proportion of
individual business households between regions has not changed significantly for
many years.
3.1.2. Credit access of individual business households in Vietnam
An individual business household in Vietnam is a form of business organization
using mainly its own capital for production and business. From 2007 to 2014, the
average equity to total capital ratio ranged from nearly 89% to about 93%. Access to
capital of business households is even more difficult when there was only 47.22% of
business households have access to formal credit at a reasonable interest rate – at about
8% - 14%/year. This shows that households have to seek funding from the semi-formal
and informal sector. However, if they access semi-formal capital (from the farmers',
women's union, youth union's funds), it will be not much, and it cannot be used in
long-term. The reaon for this problem is that the semi-formal credit has a small
amount of capital, and must be used for regular needs (such as activities of the unions,
or rewards, etc). Therefore, they must use the informal credit to have enough capital.
This capital source for individual business households comes from a number of
sources such as loans from individuals in the market, loans from pawn shops with high
interest rates (loan sharking), loans from funds (in the form of tontine).
3.2. Overview of research sample
3.2.1. Information on demographics
Table 3.2. Demographic results from research samples
Frequency Ratio
Gender of household owner
Male 550 76.18%
Female 172 23.82%
Average income of the household
(monthly average, unit: million VND)
Under 10 232 32.13%
From 10 - under 20 267 36.98%
From 20 - under 30 182 25.21%
From 30 or more 41 5.68%
Operational area City 354 49.03%
Countryside 368 50.97%
Average number of years of business Less than 1 year 28 3.88%
From 1 to less than 5
years
267 36.98%
Over 5 years 427 59.14%
Average number of employees per
household
Under 3 162 22.44%
From 3 to less than 10 498 68.98%
From 10 or more 62 8.59%
Source: Author's calculations
Among the individual business households surveyed, the number of household
owners with level of education from primary school and below is very low, at only 46
households, accounting for about 6.37%. This shows that, the education level of
households has increased significantly to improve their own literacy. The majority of
these households and those with lower secondary and upper secondary education are
located in rural areas, which have little conditions for economic development as well
as education. The number of households with intermediate education accounts for
the highest proportion - as the majority of household owners think that they only
need vocational training to be able to do business. Therefore, as for the group of
households that are involved in technology (such as repairing machines, trading in
machines) this is appropriate. Some farming households related to agriculture are
trained in intermediate-level occupations such as crops, livestocks, and fertilizers.
Most of the remaining households with higher qualifications (college - university -
postgraduate) concentrate in urban areas, trading in high-tech goods (such as
electricity, electronics, public services, etc.). This is consistent with the reality in
Vietnam since these households have conditions (economically, geographically,
etc.) to study.
3.2.2. Access to credit of individual business households in Vietnam based on
survey results
Among the surveyed households, there are 532 households using formal credit -
loans from commercial banks, financial companies, local people's credit funds,
microfinance institutions and Bank for Social Polocies. Thus, it can be seen that: up to
74% of individual business households are eligible for access to formal credit - much
higher than the survey results on individual access to credit in Vietnamese rural areas
in previous studies, which only fluctuated at about 20-40% depending on the region.
This shows that: households are also trying to improve their ability to access formal
services.
There are also certain differences regarding the average loan amount at a time:
45 households only need to borrow the amount of less than 30 million VND (i.e the
amount is not large - it is difficult for commercial banks to lend money. This is not
small amount, compared to the people's credit funds and Bank for Social Polocies).
This amount needs to be borrowed in a short period of time (less than 7 days), so the
surveyed people answered that: they accept higher interest rates to be able to borrow,
rather than waiting for banks or other institutions.
For formal credit, one of the biggest obstacles, when surveyed, the households
said that it is not the interest rate that is the hindrance, but the appraisal time.
Households fail to meet the requirements for loan applications, credit card payments or
collateral issues, as most households in rural areas do not have a House Ownership
Certificate to meet the borrowing needs or it is difficult for urban households to prove
their income if they borrow consumer oriented loans. This has led households to use
informal credit - especially loan sharking. Loan sharks usually disburse quickly: on
average, a loan only takes about 30 minutes, and accepts a small loan in a short time.
This is also the consideration of state management agencies in the coming time.
3.3. Research results of factors affecting credit access of individual business
households in Vietnam
3.3.1. For the model of formal credit access
The scale of independent variables includes 7 components: characteristics of the
household owner, experience of the household owner, distance, interest rates, loan
procedures, banking experience, e-banking services with 21 scales and these scales are
among the satisfactory factors, capable of converging and performing well of the
observed variables. The scale of the dependent variable ‘The household's accessibility
to formal credit’ (4 observed variables), has converged and performed well on the
scales. Thus, the Exploratory factor analysis (EFA) shows that the independent and
dependent variables all converge and represent well the observed variables in the scale
and are put in the next test with CFA analysis.
At the same time, when considering the relationship between the independent
variables KC, LS, TTV, KNCH, KNNH, NHI, DDCH with the dependent variable Y,
it shows that the variables KC, TTV, LS and KNNH has the correlation coefficient
r<0, which means it has inverse relationship with the dependent variable. All the
remaining independent variables have correlation coefficient 0.3 <r <0.7. Through the
analysis, it can be seen that the correlation coefficient between the independent
variables and the dependent variable shows a quite close correlation. Therefore, the
variables can be put into the CFA model for analysis.
Confirmatory factor analysis (CFA)
After linking the errors to improve the model to match the actual data, the
results of the Confirmatory factor analysis (CFA) had a coefficient of Chi-square/df =
1.889 ( 0.9); CFI = 0.94 (> 0.9); RMSEA = 0.058
(<0.08).
Structural equation modeling SEM
The coefficients in the model are consistent with actual data. The
implementation results have Chi-square / df coefficient = 1.742 (<3); GFI = 0.896; TLI
= 0.938 (> 0.9); CFI = 0.950 (> 0.9); RMSEA = 0.053 (<0.08). The model showing the
influence of the factors affecting the ability to access credit of commercial banks
includes 8 factors that the author mentioned earlier.
Figure 1. Result of structural equation modeling SEM
Source: Synthesis and analysis of the author
3.3.2. For the model of informal credit access
After the first time running EFA, the observed variables TL4, TL5 were
excluded because the load coefficients were less than 0.5. Also, observed variables
DK4 and TL6 were also eliminated because they did not converge with the observed
variables corresponding to the independent variables. After running EFA for the
second time, the variables DK1, DK2, DK3 were excluded because of the load factor
is lower than 0.5.
Table 3.9. KMO and Bartlett test
KMO 0.894
Bartlett test 5675.71
Sig. 0.000
Thus, after testing the reliability and value, scales that do not meet the
requirements are eliminated and the remaining scales selected have been tested to meet
the requirements. Thus, the research model will be adjusted as follows:
Confirmatory factor analysis CFA
The results of the second CFA analysis of the indicators measuring the
appropriateness of the model show that Chi-quare/df = 2.201 < 3, TLI = 0.967, CFI =
0.974, GFI = 0.948, which are all greater than 0.9, the RMSEA value = 0.046 < 0.05,
so the model is suitable for the market. Also all AVE values > 0.5, the reliability of
aggregated>0.7, scale reliability is guaranteed, distinctness is guaranteed AVE >MSV.
P-value coefficients of observed variables representing the factors are <0.5, these
observed variables have the ability to represent the factors in the CFA model. Thus, it
can be confirmed that the scale achieves convergence and unidirectional values.
Therefore, the research scales for individual business households accessing informal
credit have satisfied analytical requirements.
Structural equation modeling SEM
Figure 2. SEM results of access to informal credit
Source: Synthesis and analysis of the author
Test the effect of moderator variable in the “Intention to use” structural model
Table : Results of the second test on the impact of the moderator variable
Effect direction Estimates
Standard
error
(S.E.)
Critical ratio
(C.R)
P-
value
Intention to use
(Y_DINH)
Gender_ Social influence
(GT_XH) 0,183 0.018 -10.015 ***
Intention to use
(Y_DINH)
Number of years_
Expected effort
(SVN_NOLUC)
0.058 0.017 3.347 ***
Intention to use
(Y_DINH)
Gender_Financial
literacy
(GT_HB)
0.142 0.017 8.485 ***
Intention to use
(Y_DINH)
Number of years_
Financial literacy
(SVN_HB)
-0.055 0.016 -3.340 ***
Source: Synthesis and analysis of the author
CHAPTER 4:
RESULTS DISCUSSION AND RECOMMENDATIONS
4.1. Discuss research results
4.1.1. For factors that affect access to formal credit
There are 8 factors identified that affect households' access to credit in
Vietnam, including: Collateral, Income, Household's Experience, Distance, Interest
rates, Loan Procedures, Banking Experience and E-banking Service.
4.1.2. For factors that affect access to informal credit
Expected effort
Based on the results of this study, the factor “Expected effort” has a significant
negative impact on households' access to informal credit (with the meaning of
“intention to use”), and the efficiency coefficient is -0.106 and corresponding
coefficient Sig = 0.04 < 0.05, so this factor has the opposite impact to the hypothesis
H2a.
Social influence
Based on the results of data analysis in this study, the factor “Social influence”
have positive effect to the “Intention to use” of informal credit of individual business
households with the efficiency coefficient is 0.678 and the corresponding coefficient is
Sig = *** < 0.05, so the factor effects the same direction as hypothesis H3a.
Financial literacy
The research results of data analysis surprisingly show that the factor “Financial
literacy” has a positive effect on the “Intention to use” of informal credit of individual
business households with the efficiency coefficient is 0.096 and the corresponding
coefficient is Sig = 0.047 < 0.5, so this factor has the opposite impact to the
hypothesis.
Gender
Research results have shown that the factor “Gender” has the effect of
regulating the relationship between the factors “Social influence”, “Financial literacy”
and “Intention to use” in the structural model.
Number of years of business
The research results show that the number of business years of households has
an influence on the relationship between the factors “Expected effort” and “Financial
literacy” and “Intention to use” in the structural model .
4.2. Recommendations
4.2.1. Recommendations for state management agency and law agency
4.2.1.1. To increase access to formal credit services
● About Collateral
The author proposes policies to support credit institutions in reducing costs and
risks on these loans, such as reducing tax on profits from unsecured loans; requesting
the local SBV, trade authorities, and local tax authorities to cooperate closely and
enthusiastically with commercial banks, so that banks can get authentic information,
thereby approving loans more easily without the need for collateral; having policies to
encourage the acceptance of all types of assets formed in the future or intangible assets
such as intellectual property, patents, etc.
● About Geographical Distance
The State Bank of Vietnam should have recommendations on policies to
support commercial banks in expanding branches in difficult areas, uneven terrain, and
need support to access credit capital for production and business investment.
● About Loan interest rate
The State should have supportive policies on interest rates for business
households in specific and spearhead industries such as industries that require high
technology application, agriculture, industrial crops, etc.
● About loan procedures
- Include the optimization criteria of loan procedures in the criteria for rating of
credit institutions.
- Clear regulations on maximum number of days to deal with credit
applications, and a clear corridor on some cases that frequently arise.
● About Electronic Banking Service
- Include the e-banking quality improvement criteria in the criteria for rating
credit institutions.
- Organize exchange programs, guide and clarify the benefits and risks of e-
banking to household owners.
- Develop a clear and coherent legal framework and sanctions for possible risks
when dealing with electronic banking.
4.2.1.2. To limit loan sharking
The first recommendation is to review and supplement the system of legal
documents in order to detect, prosecute, investigate and strictly handle acts of usury or
loan sharking.
Secondly, the Government should soon issue regulations as a legal basis for the
management of financial activities that apply new technology and are in danger of
becoming loan sharking in Vietnam.
The third recommendation is that the Government and the State Bank of
Vietnam soon issue a loan program (including regulations on the conditions for
participation of credit institutions, regulations to promote the development of loan
products) to limit, prevent and eliminate loan sharking.
As a fourth recommendation, the Government should soon direct ministries and
departments to complete regulations and facilitate the application of digital
identification, the use of digital signatures and the ability to access basic information
needed in order to help Credit institutions develop financial products associated with
new technology (Fintech).
In the fifth recommendation, the Government soon drastically directs all levels
of government, related ministries and departments from central to local level to have
the responsibility and actively limit, prevent and eliminate loan sharking.
4.2.2. Recommendations for credit institutions
4.2.1.1. To increase access to for
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