Department of Business Administration I-Shou University Master Thesis Advisor

110 Pages·2015·4.55 MB·English

by  Windows User

Department of Business Administration
I-Shou University

Master Thesis

THE REALITY OF VIETNAM’S POVERTY
REDUCTION CAMPAIGN: AN EMPIRICAL STUDY ON
BANK FOR SOCIAL POLICIES’ PRACTICES IN HO CHI
MINH CITY

Advisor : Wen - Huei Yang, Ph.D.
Co-advisor : Ho Sy Tan, Ph.D.
Graduate Student: Ngoc Anh Nguyen

July 2015

Acknowledgements
I would not have been able to complete my thesis without the advices, assistances,
understanding and encouragement of many people. So that, I would like to send them a
gratefully for their assistance and support to me.

Firstly, the most important person I would like to thank is my advisors, Dr. Wen-Huei Yang
and Dr. Ho Si Tan. Thanks to their valuable advices and guidance throughout the process
of finishing this thesis.
Secondly, I would like to thank all of the staff at Hong Bang University and I-Shou
University who are always enthusiastic to give me a lot of administrative support,
assistance and understanding.
Thirdly, I would like to express my thanks to all of my classmates who have been sharing
with me all their knowledge, the experience, the difficulties as well as happiness. It is a
great honor to be their friend during the MBA course.
Fourthly, I felt a deep sense of gratitude for the people of Social Policies Banks in HCMC
who help me to collect the information and support to complete my paper.
Fifthly, thanks for my family who are always by my side during this time.
Lastly, that is you who are reading this paper as the references.

In brief, it is a long journey for me from the beginning time of this program in I-Shou
University until I finish this paper. I have grown in so many ways. One more time, let me
say “thank you” again for the all.

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Abstract
Poverty exists in every country no matter whether it is a rich or a poor country. Poverty and
its problem are the large and complex activity that relates to the rights, obligations and
interests of all people as well as all societies and governments. In the poverty reduction
campaign from 1999 to now, Vietnam was successfully removed from the list of poor
countries; however, like many other developing countries, the poor in Vietnam had still
needed more support to help them out of poverty sustainably and improve their living
standards. During this campaign in fighting poverty, Vietnam Bank for Social Policies is
considered as an effective tools as well as the entrusted capital sources for the poor.
In order to know more about the methods that is used by Vietnam Bank for Social Policies
and the reality of Vietnam’s poverty reduction campaign, I will use two methods that are
the combination of qualitative (case study) and quantitative (survey) to meet two important
objectives in this research. The first objective was to provide a “critical perspective” of the
reality of Vietnam’s poverty reduction campaign by obtaining the feedbacks, living
conditions, standard living from many poor people in Ho Chi Minh City. This will give us
an overview about the current poverty status. The second objective was to improve the
performance of loan programs of Vietnam Bank for Social Policies in the research by
triangulating the data analysis of the qualitative and quantitative research approaches. The
SPSS statistical software program was used in the computation of the statistical results.
The sample covers 250 participants that are on the lists of the poor people living in Ho Chi
Minh City.
This research also contributed to the existing research knowledge in the areas of poverty
reduction. The research implications for the Vietnam Bank for Social Policies of
encouraging more the poor to borrow capital to invest in farm, cultivate and breeding.
In conclusion, the research had examined and answered the three research questions.
Moreover, it also contributed to the existing research knowledge by giving the overview of
the reality of Vietnam’s poverty reduction campaign and suggested how the government
policies could be changed to encourage more people joined this campaign. If

Keywords: Poverty reduction; Vietnam Bank for Social Policies; Ho Chi Minh City;
Performance; Current status of the poor

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Table of Contents

Acknowledgements ................................................................................................ i
Abstract.................................................................................................................. ii
Table of Contents ................................................................................................. iii
List of Table ......................................................................................................... vi
List of Figures ..................................................................................................... vii
List of Abbreviates ............................................................................................. viii
Chapter 1 INTRODUCTION ................................................................................ 1
1.1 Research background...................................................................................................... 1
1.2 Statement of the problem ................................................................................................. 2
1.3 Research objectives ......................................................................................................... 3
1.4 Research questions .......................................................................................................... 3
1.5 Research significance ...................................................................................................... 4
1.6 Scope and methodology of research ................................................................................ 5
1.6.1 Research Scope ........................................................................................................ 5
1.6.2 Research methodology ............................................................................................. 5
1.7 Definition ......................................................................................................................... 6
1.7.1 Poverty ..................................................................................................................... 6
1.7.2 Microfinance .......................................................................................................... 13
1.7.3 Asymmetric Information ........................................................................................ 15
1.7.4 Social Policies Bank .............................................................................................. 16
1.7.5 Social and political organization ............................................................................ 19
1.7.6 Saving and Making Loans Communists (SMLC) .................................................. 20
1.7.7 Microfinance programs are currently deployed in HCMC .................................... 21
Chapter 2 LITERATURE REVIEW ................................................................... 22
2.1 The impact of microfinance and poverty reduction process ......................................... 22
2.2 The poverty approach in microfinance .......................................................................... 25
2.2.1 Loans to individuals ............................................................................................... 26
2.2.2 Mutual Loans Grameen Bank ................................................................................ 27
2.2.3 Mutual group lending in Latin America. ............................................................... 29
2.2.4 Bank self-governance villages (Savings and loans association) ............................ 30
2.2.5 Conclusions ............................................................................................................ 31
2.3 Reducing information asymmetry in group lending methods ....................................... 32
2.3.1 The selectivity of the same group .......................................................................... 33
2.3.2 Supervising people in the same group ................................................................... 33
2.3.3 The Dynamic Incentives ........................................................................................ 33
2.3.4 Regular repayment schedule .................................................................................. 34

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2.3.5 Alternative collaterals ............................................................................................ 34
2.3.6 Existence of group lending methods ...................................................................... 35
2.4 Social Policy Bank of Vietnam and the poor approach ................................................. 35
2.4.1 Characteristics of the approach to the poor of MFIs in Vietnam ........................... 35
2.4.2 The BSP’s approaches to the poor ......................................................................... 36
2.4.3 The BSP’s process for lending their capital funds to the poor households ........... 38
2.4.4 Performing partially entrusted loan through the political - social organizations in
the areas of wards ........................................................................................................... 40
2.5 The overview of previous research on loans for poor households and analytical
framework of the thesis ....................................................................................................... 41
2.5.1 Overview of previous studies ................................................................................ 41
2.5.2 Bank performance .................................................................................................. 44
2.5.3 The service quality ................................................................................................. 45
2.5.4 The customer satisfaction ...................................................................................... 46
2.5.5 Framework analysis of the subject. ........................................................................ 48
2.6 Conclusion .................................................................................................................... 49
Chapter 3 METHODOLOGY ........................................................................... 50
3.1 Research Design ............................................................................................................ 50
3.1.1 Data collection ....................................................................................................... 50
3.1.2 Temporal perspective ............................................................................................. 51
3.2 Sampling Designs .......................................................................................................... 51
3.3 Data Collection .............................................................................................................. 52
3.4 Data Analysis ................................................................................................................. 53
3.4.1 Data design ............................................................................................................ 53
3.4.2 Data analysis process ............................................................................................. 55
3.4.3 Data analysis .......................................................................................................... 55
Chapter 4 RESULTS AND DISCUSSION ...................................................... 57
4.1 Descriptive Analyses ..................................................................................................... 57
4.1.1 Age and gender description ................................................................................... 57
4.1.2 Education level from survey .................................................................................. 58
4.1.3 Dependency ratio ................................................................................................... 59
4.1.4 Living conditions of households. ........................................................................... 60
4.1.5 Household assets .................................................................................................... 61
4.1.6 Housing conditions ................................................................................................ 62
4.1.7 Average income ..................................................................................................... 64
4.1.8 Participation in the local mass organizations ......................................................... 64
4.2 Reliability analysis – Cronback Alpha .......................................................................... 65
4.2.1 Cronback alpha for Loan status ............................................................................. 65
4.2.2 Cronback alpha for Saving Group ......................................................................... 66
4.2.3 Cronback alpha for the loan expectation ............................................................... 67

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4.2.4 Cronback alpha for staff behavior ......................................................................... 68
4.2.5 Cronback alpha for the performance of the agency ............................................... 68
4.3 Exploratory Factor Analysis – EFA .............................................................................. 69
4.3.1 Exploratory factor analysis for independent variable for the first time ................. 69
4.3.2 Exploratory factor analysis for independent variable for the second time ............ 71
4.3.3 Exploratory factor analysis for dependent variable ............................................... 76
4.4 The first adjusted model ................................................................................................ 76
4.5 Testing the research model using regression analysis ................................................... 77
4.5.1 The correlation matrix between variables .............................................................. 77
4.5.2 The first regression analysis .................................................................................. 78
4.5.3 The second regression analysis .............................................................................. 80
4.5.4 Second Model adjusted .......................................................................................... 81
4.5.5 Result and finding summary .................................................................................. 82
Chapter 5 CONCLUSION AND SUGGESTIONS .......................................... 84
5.1 Research Summary ........................................................................................................ 84
5.2 Theoretical and Practical Implications .......................................................................... 85
5.2.1 Social factors .......................................................................................................... 85
5.2.2 Flexible mechanism of interest rates ..................................................................... 86
5.2.3 Diversity lending objectives .................................................................................. 87
5.2.4 The organization and activities of savings and loan board .................................... 88
5.3 Research Limitations ..................................................................................................... 91
5.4 Directions/Suggestions for Future Research ................................................................. 92
References ........................................................... Error! Bookmark not defined.
Appendix A Detail of the survey ....................................................................... 95

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List of Table

Table 3.3 Data collection in Ho Chi Minh ........................................................................... 53
Table 4.1.1 Age and gender description of survey participants ......................................... 57
Table 4.1.2.1 The household’s education level from the survey ......................................... 58
Table 4.1.2.2 The household’s education level .................................................................... 59
Table 4.1.4 Basic information about socio-economic situation of the household ............... 60
Table 4.1.5.1 Summary of household assets ........................................................................ 61
Table 4.1.5.2 Summary of household assets ........................................................................ 61
Table 4.1.6.1 The situation of housing ................................................................................ 62
Table 4.1.6.2 House ownership and loan ............................................................................ 63
Table 4.1.6.3 The housing index as the poor household scale of CEP ................................ 63
Table 4.1.6.4 House ownership in percentage ..................................................................... 63
Table 4.1.7 Classification of the average income of poor households based on poverty level
scale of CEP ........................................................................................................................ 64
Table 4.1.8 Classification of poor households based on poverty level scale of CEP .......... 65
Table 4.2.1 Cronback Alpha results for Loan status ............................................................ 65
Table 4.2.2 Cronback alpha for Saving Group .................................................................... 66
Table 4.2.3 Cronback alpha for the loan expectation .......................................................... 67
Table 4.2.4 Cronback alpha for staff behavior .................................................................... 68
Table 4.2.5 Cronback alpha for the satisfaction of the poor ................................................ 68
Table 4.3.1.1 KMO and Barlett’s Test for independent variable ......................................... 69
Table 4.3.1.2 Total Variance Explained for independent variables ..................................... 70
Table 4.3.1.3 Communalities for independent variable ....................................................... 71
Table 4.3.2.1 KMO and Bartlett’s Test for independent variable the second time .............. 72
Table 4.3.2.2 Communalities for independent variable the second time ............................. 72
Table 4.3.2.3 Total variance explained independent variable the second time .................... 73
Table 4.5.1 The correlation matrix among 7 new variables ................................................ 78
Table 4.5.2 The first Regression analysis information for 7 new variables ........................ 78
Table 4.5.3 The second analysis about the regression for the new 6 variables ................... 80

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List of Figures
Figure 1.7.1.1 The impact of poverty ......................................................................................... 8
Figure 1.7.1.2 Indicator of the poor ........................................................................................... 8
Figure 1.7.1.3 The status of the poor’s educational level ......................................................... 10
Figure 1.7.1.4 The status of the poor’s educational in lower secondary school ...................... 10
Figure 1.7.1.5 The status of the poor’s educational in upper secondary school ...................... 11
Figure 1.7.1.6 The statistic about education level of the poor in Vietnam 2010 .................... 11
Figure 1.7.4 Organizational structure of VBSP ....................................................................... 18
Figure 2.1 Poverty Rates (percent poor) in 1999 and 2009 from WorldBank 2010 ................ 23
Figure 2.1 Poverty Rates (percent poor) by Ethnicity in 2009 ................................................. 24
Figure 2.2.2 Diagram under the group lending model of the Grameen Bank .......................... 28
Figure 2.4.1 Economic Growth and Poverty Reduction in Vietnam in two ............................ 36
Figure 2.4.3 The BSP’s process for lending their capital funds ............................................... 39
Figure 2.5.1.1 Sustainable livelihood approaches from International Development ............... 42
Figure 2.5.1.2 Model used by bank social policies to support the poor ................................... 43
Figure 2.5.4 Expectation-Outcome Experience of Customers ................................................. 47
Figure 2.5.5 Conceptual Model and Theoretical Framework .................................................. 48
Figure 3.4.2 Data analysis process ........................................................................................... 55
Figure 4.1.2 Per-capita Income per Year by Education of most Educated Working-age
Household Member, Urban and Rural Households, 2004 and 2010 ........................................ 58
Figures 4.4 Hypothesis for the first adjusted model ................................................................. 77
Figure 4.5.4 Hypothesis for the second adjusted mode ............................................................ 82

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List of Abbreviates

Ho Chi Minh City HCM city
Vietnam Bank Social Policy VBSP
Bank Social Policies BSP
Save and Borrowing Group SBG
Human Poverty Index HPI
Saving and Making Loans Communists SMLS
Saving and Loan Group SLG
Microfinance institutions MFIs
Capital Aid Fund for Employment of the Poor CFE

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