Share:


Does microfinancing, financial inclusion, and educational loans alleviate poverty and inequality: evidence from Vietnam

    Trung Kien Tran Affiliation

Abstract

Poverty reduction is considered as the top priority of governments and international institutions. At the same time income inequality is a far-reaching concern especially in emerging nations. US former president even labelled income inequality and poverty are the challenges of our times. Theoretically there are different views on the impact of microfinancing and financial inclusion on income inequality and poverty, hence, it is interesting to evaluate these estimations in Vietnamese context from 1986 to 2020. The researchers have applied the Bayesian Auto-regressive Distributed Lags (BARDL) model and exposed that microfinancing, financial inclusion, educational loans increase income equality and reduces poverty. Based on the evidences, the paper implies that government institutions must focus on microfinancing and financial inclusion aspects to facilitate poor and boost prosperity which ultimately brings income equality.


First published online 21 November 2023

Keyword : microfinancing, financial inclusion, educational loans, alleviation of poverty and inequality, industrialization, Vietnam

How to Cite
Tran, T. K. (2023). Does microfinancing, financial inclusion, and educational loans alleviate poverty and inequality: evidence from Vietnam. Technological and Economic Development of Economy, 29(6), 1687–1707. https://doi.org/10.3846/tede.2023.20348
Published in Issue
Dec 7, 2023
Abstract Views
543
PDF Downloads
448
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

References

Abduvaliev, M., & Bustillo, R. (2020). Impact of remittances on economic growth and poverty reduction amongst CIS countries. Post-Communist Economies, 32(4), 525–546. https://doi.org/10.1080/14631377.2019.1678094

Adebayo, T. S., Udemba, E. N., Ahmed, Z., & Kirikkaleli, D. (2021). Determinants of consumption-based carbon emissions in Chile: An application of non-linear ARDL. Environmental Science and Pollution Research, 28(32), 43908–43922. https://doi.org/10.1007/s11356-021-13830-9

Al Mamun, A., Muniady, R., & Nasir, N. A. B. M. (2021). Effect of participation in development initiatives on competitive advantages, performance, and sustainability of micro-enterprises in Malaysia. Contemporary Economics, 15(2), 122–138.

Badulescu, D., Simut, R., Mester, I., Dzitac, S., Sehleanu, M., Bac, D. P., & Badulescu, A. (2021). Do economic growth and environment quality contribute to tourism development in EU countries? A panel data analysis. Technological and Economic Development of Economy, 27(6), 1509–1538. https://doi.org/10.3846/tede.2021.15781

Britton, J., van der Erve, L., & Higgins, T. (2019). Income contingent student loan design: Lessons from around the world. Economics of Education Review, 71, 65–82. https://doi.org/10.1016/j.econedurev.2018.06.001

Brown, P., & James, D. (2020). Educational expansion, poverty reduction and social mobility: Reframing the debate. International Journal of Educational Research, 100, Article 101537. https://doi.org/10.1016/j.ijer.2020.101537

Cepparulo, A., Cuestas, J. C., & Intartaglia, M. (2017). Financial development, institutions, and poverty alleviation: An empirical analysis. Applied Economics, 49(36), 3611–3622. https://doi.org/10.1080/00036846.2016.1265074

Cera, G., Khan, K. A., Blahova, A., & Belas Jr, J. (2022). Do owner-manager demographics in SMEs matter for corporate social responsibility? Equilibrium. Quarterly Journal of Economics and Economic Policy, 17(2), 511–531. https://doi.org/10.24136/eq.2022.018

Charlier, D., & Legendre, B. (2021). Fuel poverty in industrialized countries: Definition, measures and policy implications a review. Energy, 236, Article 121557. https://doi.org/10.1016/j.energy.2021.121557

Chikwira, C., Vengesai, E., & Mandude, P. (2022). The impact of microfinance institutions on poverty alleviation. Journal of Risk and Financial Management, 15(9), Article 393. https://doi.org/10.3390/jrfm15090393

Datzberger, S. (2018). Why education is not helping the poor. Findings from Uganda. World Development, 110, 124–139. https://doi.org/10.1016/j.worlddev.2018.05.022

Dauda, R. S. (2017). Poverty and economic growth in Nigeria: Issues and policies. Journal of Poverty, 21(1), 61–79. https://doi.org/10.1080/10875549.2016.1141383

Duong, H. A., & Nghiem, H. S. (2022). The impact of microfinance on poverty reduction in Vietnam: A dynamic panel‐data analysis. Poverty & Public Policy, 14(4), 405–422. https://doi.org/10.1002/pop4.354

Erlando, A., Riyanto, F. D., & Masakazu, S. (2020). Financial inclusion, economic growth, and poverty alleviation: Evidence from eastern Indonesia. Heliyon, 6(10), 52–70. https://doi.org/10.1016/j.heliyon.2020.e05235

Febriani, R. E., Yefriza, R. A. E., Ekaputri, R. A., Sitorus, A., & Putri, N. T. (2021). Inflation, unemployment, and economic growth: Implication on poverty level in Bengkulu Province. https://doi.org/10.4108/eai.3-10-2020.2306624

Fosu, A. K. (2015). Growth, inequality and poverty in Sub-Saharan Africa: Recent progress in a global context. Oxford Development Studies, 43(1), 44–59. https://doi.org/10.1080/13600818.2014.964195

Francis, D., & Webster, E. (2019). Poverty and inequality in South Africa: Critical reflections. Development Southern Africa, 36(6), 788–802. https://doi.org/10.1080/0376835X.2019.1666703

Ghazouani, T., Boukhatem, J., & Sam, C. Y. (2020). Causal interactions between trade openness, renewable electricity consumption, and economic growth in Asia-Pacific countries: Fresh evidence from a bootstrap ARDL approach. Renewable and Sustainable Energy Reviews, 133, Article 110094. https://doi.org/10.1016/j.rser.2020.110094

Hassan, M. S., Bukhari, S., & Arshed, N. (2020). Competitiveness, governance and globalization: What matters for poverty alleviation? Environment, Development and Sustainability, 22(4), 3491–3518. https://doi.org/10.1007/s10668-019-00355-y

Hussain, H. I., Kamarudin, F., Anwar, N. A. M., Sufian, F., Ali, A., & Saudi, M. H. (2022). Social globalisation and efficiency of microfinance institutions nexus: Empirical evidence on financial and social efficiency. Engineering Economics, 33(1), 27–46. https://doi.org/10.5755/j01.ee.33.1.29130

Hussain, J., Mahmood, S., & Scott, J. (2019). Gender, microcredit and poverty alleviation in a developing country: The case of women entrepreneurs in Pakistan. Journal of International Development, 31(3), 247–270. https://doi.org/10.1002/jid.3403

Janovská, K., Vozňáková, I., Besta, P., & Šafránek, M. (2021). Ecological and economic multicriteria optimization of operating alternative propulsion vehicles within the city of Ostrava in the Czech Republic. Equilibrium. Quarterly Journal of Economics and Economic Policy, 16(4), 907–943. https://doi.org/10.24136/eq.2021.034

Khan, A. A., Khan, S. U., Fahad, S., Ali, M. A., Khan, A., & Luo, J. (2021). Microfinance and poverty reduction: New evidence from Pakistan. International Journal of Finance & Economics, 26(3), 4723–4733. https://doi.org/10.1002/ijfe.2038

Khan, S., Yahong, W., & Zeeshan, A. (2022). Impact of poverty and income inequality on the ecological footprint in Asian developing economies: Assessment of Sustainable Development Goals. Energy Reports, 8, 670–679. https://doi.org/10.1016/j.egyr.2021.12.001

Kling, G., Pesqué-Cela, V., Tian, L., & Luo, D. (2022). A theory of financial inclusion and income inequality. The European Journal of Finance, 28(1), 137–157. https://doi.org/10.1080/1351847X.2020.1792960

Kouadio, H. K., & Gakpa, L. L. (2022). Do economic growth and institutional quality reduce poverty and inequality in West Africa?. Journal of Policy Modeling, 44(1), 41–63. https://doi.org/10.1016/j.jpolmod.2021.09.010

Lal, T. (2018). Impact of financial inclusion on poverty alleviation through cooperative banks. International Journal of Social Economics, 45(5), 808–828. https://doi.org/10.1108/IJSE-05-2017-0194

Marin-Garcia, A., Gil-Saura, I., & Ruiz-Molina, M. E. (2022). Do innovation and sustainability influence customer satisfaction in retail? A question of gender. Economic Research-Ekonomska Istraživanja, 35(1), 546–563. https://doi.org/10.1080/1331677X.2021.1924217

Meirun, T., Mihardjo, L. W., Haseeb, M., Khan, S. A. R., & Jermsittiparsert, K. (2021). The dynamics effect of green technology innovation on economic growth and CO2 emission in Singapore: New evidence from bootstrap ARDL approach. Environmental Science and Pollution Research, 28(4), 4184–4194. https://doi.org/10.1007/s11356-020-10760-w

Méndez-Picazo, M. T., Galindo-Martín, M. A., & Castaño-Martínez, M. S. (2021). Effects of sociocultural and economic factors on social entrepreneurship and sustainable development. Journal of Innovation & Knowledge, 6(2), 69–77. https://doi.org/10.1016/j.jik.2020.06.001

Michálek, A., & Výbošťok, J. (2019). Economic growth, inequality and poverty in the EU. Social Indicators Research, 141(2), 611–630. https://doi.org/10.1007/s11205-018-1858-7

Miled, K. B. H., Younsi, M., & Landolsi, M. (2022). Does microfinance program innovation reduce income inequality? Cross-country and panel data analysis. Journal of Innovation and Entrepreneurship, 11(1), 1–15. https://doi.org/10.1186/s13731-022-00195-7

Mushtaq, R., & Bruneau, C. (2019). Microfinance, financial inclusion and ICT: Implications for poverty and inequality. Technology in Society, 59, 101–116. https://doi.org/10.1016/j.techsoc.2019.101154

Narloch, U., & Bangalore, M. (2018). The multifaceted relationship between environmental risks and poverty: New insights from Vietnam. Environment and Development Economics, 23(3), 298–327. https://doi.org/10.1017/S1355770X18000128

Ncube, M., Anyanwu, J. C., & Hausken, K. (2014). Inequality, economic growth and poverty in the Middle East and North Africa (MENA). African Development Review, 26(3), 435–453. https://doi.org/10.1111/1467-8268.12103

Neaime, S., & Gaysset, I. (2018). Financial inclusion and stability in MENA: Evidence from poverty and inequality. Finance Research Letters, 24, 230–237. https://doi.org/10.1016/j.frl.2017.09.007

Ngoc, B. H., & Awan, A. (2022). Does financial development reinforce ecological footprint in Singapore? Evidence from ARDL and Bayesian analysis. Environmental Science and Pollution Research, 29(16), 24219–24233. https://doi.org/10.1007/s11356-021-17565-5

Nguyen, C. V., & Pham, N. M. (2018). Economic growth, inequality, and poverty in Vietnam. Asian-Pacific Economic Literature, 32(1), 45–58. https://doi.org/10.1111/apel.12219

Ogbeide, S. O., & Igbinigie, O. O. (2019). Financial inclusion and poverty alleviation in Nigeria. Accounting and Taxation Review, 3(1), 42–54.

Osakwe, P. N. (2018). Unlocking the potential of the power sector for industrialization and poverty alleviation in Nigeria. In The service sector and economic development in Africa (pp. 159–180). Routledge. https://doi.org/10.4324/9781315627373-10

Pham, T. H., & Riedel, J. (2019). Impacts of the sectoral composition of growth on poverty reduction in Vietnam. Journal of Economics and Development, 21(2), 213–222. https://doi.org/10.1108/JED-10-2019-0046

Phan, C. T., Vo, T. T., & Vo, D. T. H. (2023). Can microcredit reduce vulnerability to poverty? Evidence from rural Vietnam. Review of Development Economics, 27(1), 608–629. https://doi.org/10.1111/rode.12951

Pilinkienė, V., Stundziene, A., Stankevičius, E., & Grybauskas, A. (2021). Impact of the economic stimulus measures on Lithuanian real estate market under the conditions of the COVID-19 pandemic. Engineering Economics, 32(5), 459–468. https://doi.org/10.5755/j01.ee.32.5.28057

Pimhidzai, O., & Niu, C. (2021). Shared gains: How high growth and anti-poverty programs reduced poverty in Vietnam – Vietnam poverty and shared prosperity update report. Asian Economic and Financial Review, 2, 16–31.

Prasetyo, P. E., & Kistanti, N. R. (2020). Human capital, institutional economics and entrepreneurship as a driver for quality & sustainable economic growth. Entrepreneurship and Sustainability Issues, 7(4), 2575–2586. https://doi.org/10.9770/jesi.2020.7.4(1)

Qin, Y., Wang, X., Xu, Z., & Škare, M. (2021). The impact of poverty cycles on economic research: Evidence from econometric analysis. Economic Research-Ekonomska Istraživanja, 34(1), 152–171. https://doi.org/10.1080/1331677X.2020.1780144

Riggirozzi, P. (2020). Social policy, inequalities and the battle of rights in Latin America. Development and Change, 51(2), 506–522. https://doi.org/10.1111/dech.12571

Salakpi, E. E., Hurley, P. D., Muthoka, J. M., Barrett, A. B., Bowell, A., Oliver, S., & Rowhani, P. (2021). Forecasting vegetation condition with a bayesian auto-regressive distributed lags (BARDL) model. Natural Hazards and Earth System Sciences. Discussions, 1–31. https://doi.org/10.5194/nhess-2021-223

Sehrawat, M., & Giri, A. (2018). The impact of financial development, economic growth, income inequality on poverty: Evidence from India. Empirical Economics, 55(4), 1585–1602. https://doi.org/10.1007/s00181-017-1321-7

Shafi, M., Szopik-Depczyńska, K., Cheba, K., Ciliberto, C., Depczyński, R., & Ioppolo, G. (2022). Innovation in traditional handicraft companies towards sustainable development. A systematic literature review. Technological and Economic Development of Economy, 28(6), 1589–1621. https://doi.org/10.3846/tede.2022.17085

Shahzad, M., Qu, Y., Rehman, S. U., & Zafar, A. U. (2022). Adoption of green innovation technology to accelerate sustainable development among manufacturing industry. Journal of Innovation & Knowledge, 7(4), Article 100231. https://doi.org/10.1016/j.jik.2022.100231

Son, H., & Yoon, S. (2020). Reducing energy poverty: Characteristics of household electricity use in Vietnam. Energy for Sustainable Development, 59, 62–70. https://doi.org/10.1016/j.esd.2020.08.007

Subramaniam, Y., Masron, T. A., Wahab, M. A., & Mia, M. A. (2021). The impact of microfinance on poverty and income inequality in developing countries. Asian‐Pacific Economic Literature, 35(1), 36–48. https://doi.org/10.1111/apel.12326

Tabeikyna, E. K., Kamalova, G. T., Hasanov, E. L., Dzhumagaliyeva, K. V., & Demeuova, N. K. (2021). The place of intelligentsia in socio-economic development of society: The creative perspective. Creativity Studies, 14(1), 235–250. https://doi.org/10.3846/cs.2021.13639

Talha, M., Sohail, M., Tariq, R., & Ahmad, M. T. (2021). Impact of oil prices, energy consumption and economic growth on the inflation rate in Malaysia. Cuadernos de Economía, 44(124), 26–32.

Tasos, S., Amjad, M. I., Awan, M. S., & Waqas, M. (2020). Poverty alleviation and microfinance for the economy of Pakistan: A case study of Khushhali Bank in Sargodha. Economies, 8(3), 63–72. https://doi.org/10.3390/economies8030063

Tran, H. T. T., Le, H. T. T., Nguyen, N. T., Pham, T. T. M., & Hoang, H. T. (2022). The effect of financial inclusion on multidimensional poverty: The case of Vietnam. Cogent Economics & Finance, 10(1), Article 2132643. https://doi.org/10.1080/23322039.2022.2132643

Tran, T. K. (2023). The role of green trade, green energy technologies, and green finance on environmental degradation: Evidence from ASEAN countries. International Journal of Economics and Finance Studies, 15(2), 20–39.

Tran, T. K., Lin, C. Y., Tu, Y. T., Duong, N. T., Thi, T. D. P., & Shoh-Jakhon, K. (2023). Nexus between natural resource depletion and rent and COP26 commitments: Empirical evidence from Vietnam. Resources Policy, 85(B), Article 104024. https://doi.org/10.1016/j.resourpol.2023.104024

Ullah, A., Pinglu, C., Ullah, S., Aslam, N., & Zaman, M. (2020). Role of microfinance in poverty alleviation in the least developed area of Pakistan. Asian Economic and Financial Review, 10(12), 1430–1452. https://doi.org/10.18488/journal.aefr.2020.1012.1430.1452

Vu, L. H., & Nguyen, T.-A. (2021). Elderly poverty in Vietnam: Trends and determinants. Journal of Population and Social Studies, 29, 526–543. https://doi.org/10.25133/JPSSv292021.033

Westerlund, J., & Edgerton, D. L. (2008). A simple test for cointegration in dependent panels with structural breaks. Oxford Bulletin of Economics and Statistics, 70(5), 665–704. https://doi.org/10.1111/j.1468-0084.2008.00513.x

Yahaya, M. H., & Ahmad, K. (2018). Financial inclusion through efficient zakat distribution for poverty alleviation in Malaysia: Using fintech & mobile banking. In Proceeding of the 5th International Conference on Management and Muamalah 2018 (ICoMM 2018) (pp. 15–31). Tenera Hotel, Bangi, Malaysia.