Impact of microcredit on the basic education of children in rural Vietnamese households
Abstract
This study examines the impact of participation in microcredit programs on the general education of children in rural households in central Vietnam, utilizing data from the Vietnam Household Living Standards Survey (VHLSS) for the years 2016, 2018, and 2020. By including both borrowing and non-borrowing households with similar income and assets, the study minimizes bias from living conditions and ensures observational consistency. To measure children’s general education, we employ two indicators of the total years of schooling completed and the gap between the expected years of schooling based on age and the actual years completed. Depending on the data characteristics of these educational indicators, various models, including Zero-Inflated Poisson (ZIP) and Negative Binomial (NB), are applied to estimate the impact. Furthermore, potential endogeneity issues within the regression model are carefully addressed. The study findings indicate that microcredit, specifically microcredit loans, assists some households in preventing educational disruption among their children, reducing the gap between expected and actual schooling years. However, in cases where disruption does occur, households with microcredit loans may experience a more pronounced educational gap. The study recommends improving loan terms and raising awareness of the value of education to mitigate these negative effects.