The impact of microcredit on self-employment profits in Vietnam

Abstract

This study examines the impact of microcredit on household self-employment profits in Vietnam. For two indicators of credit participation - a dichotomous participation dummy and the accumulated amount of microcredit received per household - the analysis reveals a positive effect on household profits. The analysis also reveals that an instrumental variable method within a fixed-effects framework can control for the possible endogeneity of credit and thereby identify the true effect of credit. © 2011 The Authors. Economics of Transition © 2011 The European Bank for Reconstruction and Development.