Household Borrowing in Vietnam: A Comparative Study of Default Risks of Informal, Formal and Semi-Formal Credit
نویسندگان
چکیده
In this paper, we examine differences in default risks for formal, informal and semi-formal loans and analyze the determinants of default risks regarding the three credit sources, using household data for Vietnam. We find that smaller-sized households with collateral and/or a guarantor borrow primarily from formal and semi-formal lenders whereas female contractors, large-sized households and borrowers without collateral or a guarantor mainly rely on informal lenders. We also discover that informal lenders face a higher default risk than formal and semi-formal lenders. In addition, we identify some loan contract items that are particularly relevant in determining default risk of formal credit, such as the loan maturity and the loan interest rate. Finally, we highlight the typical use of relatives for informal lending in the way that borrowing from relatives lowers default rates on informal loans.
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