Can microcredit benefit poor and women-headed households? Microcredit for an income-generation project in Vietnam

Abstract

This paper presents empirical evidence from an impact evaluation of a microcredit project for a self-initiated income generation project carried out in the rural region of Quang Tri, Vietnam, focusing on the effect of microcredit for poor and female-headed households. The analysis involves pre- and post-intervention surveys of 660 households, comprising 400 in the treatment group and 260 in the control group. The combined propensity score matching and difference-in-differences (PSM-DID) methodology is employed to ascertain the causal relationship between the intervention and its effects on income, health, education and overall well-being. The findings reveal that microcredit for self-initiated income generation projects led to a 21.5% increase in income for the treatment group. However, while microcredit contributes to expanding the grain cultivation area for poor households, it does not ultimately lead to increased agriculture-related income due to a lack of skills and additional resources. We also found that while the impact of the intervention on health and educational outcomes did not reach statistical significance for the entire sample, it did result in a 10.6-point and 7.1-point improvement in the self-health assessment index for poor and near-poor households, respectively.