Vietnam Case

Vietnam is considered one of the few countries that has obtained the remarkable achievement in poverty reduction. As annual reports by GSO showed, the poverty rate has declined from 37.4 percent in 1998, to 18.1 percent in 2004 to 13.4 percent in 2008. In a report by GSO (2008), the poverty rate in rural areas (16.1 percent) was higher than that in urban areas (6.7 percent). A large number of farmers in Vietnam are still living in poverty and under poor living standards. Moreover, they have difficulties with accessing to credit sources especially, formal credit sources. As a result, they mostly borrow from informal sources for financing their production as well as for consumption. That results in the fact that they may fall into deeper debt and default debt. Therefore, in order to gain the more preeminent achievement of hunger eradication and poverty reduction as well as to help the poor escape from poverty, the Vietnam Government have invested a great number of capital as well as provided financial services to support the rural households, especially the poor in rural areas via credit programs. One of the special credit programs that the Government applied the program is microcredit.

As the definition by Microcredit Summit (1997), microcredit program is a program which provides small loans to poor people so that they can generate income to improve their living standard.

Many countries have applied microcredit programs as a tool of poverty reduction as well as a channel of providing credit to rural households. Microcredit has been popularly applied and its impact on welfare or living standard of households has been studied by many authors. However, there are two mixed opinions about the impact of microcredit as follows:

* On the bright side, Khandker, S. R. (1998), Yunus (2009) considered microcredit as the tool for the purpose of poverty alleviation and hunger eradication. To reaffirm this statement, the study by Alexander (2011), Zaman (1999), Kumar (2005), and Sarangi (2007) showed that microcredit program has positive impacts on the household's welfare via increasing their income and consumption.

* On the limited side, some researchers argued that microcredit insignificantly affects welfare of households. Coleman (1999) stated that there is no evidence of the microcredit program impact on the living standard which is reflected via assets and income.

However, in Vietnam, does this program actually have impacts on welfare and poverty of the rural households, especially the poor rural households as well as target these poor households?

In Vietnam, there have been also many researches about the impact of microcredit program on the households, especially the households in rural areas and the poor rural households. Cuong Nguyen (2008) proved that VBSP microcredit programs enhance the incomes and expenditures of the rural households in Vietnam. Also in his research, microcredit program is found