Basic issues on the relationship between the accessibility to financial inclusion and the business

TABLE OF CONTENT

TABLE OF CONTENT.........................................................................................i

LIST OF TABLE...................................................................................................v

DECLARATION...................................................................................................1

Acknowledgment...................................................................................................2

Chapter 0: Introduction..........................................................................................1

0.1. Problems statement.....................................................................................1

0.2. Overview of related studies (research situation)........................................1

0.3. Research objectives....................................................................................3

0.4. Thesis question...........................................................................................3

0.5. Research scope:..........................................................................................4

0.6. Methodology...............................................................................................4

0.7. New contributions of the research..............................................................4

0.8. Thesis structure...........................................................................................5

Chapter 1 BASIC ISSUES ON THE RELATIONSHIP BETWEEN THE

ACCESSIBILITY TO FINANCIAL INCLUSION AND THE BUSINESS

RESULTS OF MICRO BUSINESSES.................................................................6

1.1. Overview of financial inclusion.................................................................6

1.1.1. Definition and history of financial inclusion development.................6

1.1.1.1 Definition.......................................................................................6

1.1.1.2 History of financial inclusion development.................................10

1.1.2 Principles of financial inclusion........................................................13

1.1.3. Measuring financial inclusion...........................................................14

1.1.3.1 Supply-Side Research..................................................................16

1.1.3.2 Demand-Side Research...............................................................18

1.1.3.3 Financial Landscape Studies.......................................................20

1.2. Financial inclusion for micro-sized enterprise.........................................21

1.2.1. Definition and features of micro-sized enterprise.............................21

1.2.2. Financial inclusion providers for micro sized enterprise..................25

1.2.3. Financial inclusion services for micro sized enterprise.....................27

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1.3. The relationship between accessibility to financial inclusion and business

performance of micro sized enterprise............................................................28

1.3.1. Overview of accessibility to financial inclusion...............................28

1.3.1.1. Definition....................................................................................28

1.3.1.2. Criteria.......................................................................................29

1.3.2. Financial performance of MSEs........................................................29

1.3.2.1. Definition....................................................................................29

1.3.2.2. Criteria.......................................................................................29

1.3.3. Relationship between financial inclusion accessibility and financial

performance of MSEs:.................................................................................33

1.4. International experience and lesson for Vietnam in promoting

accessibility of financial inclusion for MSEs (done)......................................35

1.4.1. Financial inclusion for MSEs in the world........................................35

1.4.1.1. Global.........................................................................................35

1.4.1.2. USA.............................................................................................36

1.4.1.3. Asia countries.............................................................................38

1.4.2. Models promote accessibility of financial inclusion to MSEs..........41

1.4.2.1. Individual agencies – experienced from landbank.....................41

1.4.2.2. Retail selling base on people (Grameen Bank in Bangladesh;

ASKI, CARD in Philippines; The Bank Rakyat Indonesia (BRI) in

Indonesia, ACLEDA in Cambodia).........................................................41

1.4.2.3. Retail selling based on technology model (BanKO)...................44

1.4.2.4. Developing financial inclusion services for MSEs through post

office........................................................................................................44

1.4.3. Lesson for Vietnam...........................................................................46

Chapter 2: THE SITUATION OF ACCESSIBILITY TO FINANCIAL

INCLUSION OF MICRO SIZED ENTERPRISE IN VIETNAM......................48

2.1. Overview of financial inclusion services for micro sized enterprise in

Vietnam...........................................................................................................48

2.1.1. Financial inclusion market for micro-sized enterprise in Vietnam...48

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2.1.1.1. Financial inclusion services for micro-sized enterprise in

Vietnam....................................................................................................48

2.1.1.2. Financial inclusion providers for micro sized enterprise in

Vietnam....................................................................................................49

2.1.2. Legal framework for financial inclusion...........................................52

2.2. Đánh giá thực trạng mức độ tiếp cận tài chính toàn diện của các hộ kinh

doanh siêu nhỏ tại Việt Nam...........................................................................55

2.2.1. Achievements....................................................................................55

2.2.2. Limitations.........................................................................................56

2.2.3. Causes................................................................................................58

CHƯƠNG 3: MODEL AND THE RESEARCH RESULTS OF THE

RELATIONSHIP BETWEEN FINANCIAL INCLUSION ACCESSIBILITY

AND FINANCIAL PERFORMANCE OF THE MICRO BUSINESS IN

HANOI................................................................................................................59

3.1. Research model and hypothesis................................................................59

3.1.1. Research model.................................................................................59

3.2. Research design........................................................................................60

3.2.1. Research objectives:..........................................................................60

3.2.2. Research approaching method:..........................................................61

3.2.3. Research process...............................................................................62

3.4. Design research sample and research subjects.........................................63

3.4.1. Research samples...............................................................................63

3.4.2. Choosing sample size method...........................................................64

3.4.3. Collecting data method......................................................................64

3.5. Research result..........................................................................................65

3.5.1. Analysis of descriptive statistics.......................................................65

3.5.2. Reliability measure for Business performance of micro business

households...................................................................................................65

3.5.3. Exploratory Factor Analysis..............................................................67

3.5.4. Correlation Analysis with Independent Variable..............................70

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3.5.5. Regression analysis...........................................................................71

CHAP 4: DISCUSSIONS AND RECOMMENDATIONS ABOUT

ACCESSIBILITY TO FINANCIAL INCLUSION............................................74

4.1. Discussing results of the survey...............................................................74

4.1.1. The overall financial performance of households using financial

inclusion services:.......................................................................................74

4.1.2. Accessibility to financial inclusion of micro business households:. .76

4.1.2.1. Crediting behaviors:...................................................................76

4.1.2.2. Internet transaction behaviors:..................................................77

4.1.2.3. Saving behaviors:.......................................................................78

4.1.3. Affect of financial inclusion factors on business performance:........79

4.2. Findings about the accessibility toward financial inclusion of micro

business:..........................................................................................................80

4.3: Recommendations about improving accessibility to financial inclusion

services............................................................................................................82

4.3.1. Recommendation for financial inclusion provider (P1, P2, P3,…)...82

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LIST OF TABLE

Table: Financial inclusion providers for micro sized enterprise in Vietnam......49

Formal financial accounts:..................................................................................56

Figure 3.1: Research Model................................................................................59

Hình 3.2: Research process.................................................................................62

Table 3.1: Sample size based on Factor Loading................................................63

Table 3.2: Descriptive statistic............................................................................65

Bảng 3.3: Độ tin cậy của nhân tố “Business performance of micro business

households...........................................................................................................66

Table 3.4: Results of EFA...................................................................................68

Table 3.5: Correlation analysis between the independent and dependent

variables...............................................................................................................70

Table 3.6: Recurrence analysis result..................................................................72

Bảng 3.7: ANOVA analysis result......................................................................73

Table 3.8: Mức độ phù hợp của mô hình............................................................73

Figure 1: Comparison of Business's Growth distribution of Micro businesses

with financial inclusion and without financial inclusion.....................................74

Table 1: Statistic description of BUZ and BUZ0 in the survey..........................75

Table 2: Statistic description in number of businesses using financial services. 76

Table 3: Providers of financial inclusion services...............................................77

Table 4:Purposes of using Internet transactions..................................................77

Table 5:Saving behaviors....................................................................................78

Figure 2: Importance of financial inclusion to business performance evaluated

by households......................................................................................................80

Table 6: Reason preventing households to use FI services.................................81

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DECLARATION

We, the authors, as a team of five member: Nguyen Tuan Nghia, Le

Phuong Mai, Truong Duc Huy, Tran Thuy Trang and Le Thi Mai Vi, guarantee

that this is the science research conducted and analyzed independently by our

team. The figures and numbers used to analyze are reliably proven by reliable

sources, or being stated officially, suitable with any standards. The results and

examinations is based on our discovering, analyzing honestly, carefully and all

are appropriate with the current situations of Vietnam. Finally, we ensure that

those results have never been stated in any other project so far.

Acknowledgment

As the authors of this project, we would like to give our special thanks to

our instructor - Ass. Prof. Le Thanh Tam of National Economic University, who

has guided and instructed us during the research. Without her supports in

finding reference and related materials as well as giving us clear path to

approach to such a new topic, we would not have been able to accomplish this

research successfully.

Also, thanks to our interviewers, those who run micro businesses, have

helped us complete the surveys, from that data basis, we are capable of running

the regression model and make our analysis. Your responses have contributed

largely to our research, without your responses, we cannot finish our project

objectively.

Another thank is for our consultants which ranges from our peers, our

teachers, seniors and anyone who have helped us in conducting the survey and

accomplishing the research on time and productively.

Thank all of you!

Chapter 0: Introduction

0.1. Problems statement

a. Theoretical aspect

Financial inclusion is considered essential for the sustainable

development of any nations. “This is not only for poor people. This is for

everyone.” (Margarita María Henao Cabrera). It boosts the production,

manufacturing and transaction among people within the economy and

Therefore; thrives the economy.

However, financial inclusion has change the situations of the poor more

significantly and positively than the rich. Because the barrier between the poor

and other financial services is significant to some extends, it is considered

difficult for them to fund their own business and other essential activities

without financial inclusion.

So, besides the benefits of sustainable growth of the nation's’ economy,

the financial inclusion also helps in poverty alleviation.

b. Situational aspects

Financial inclusion provides users with access to financial services and

activities they need to manage their financial and economic lives. Financial

inclusion raised a concern in developing nations with its nature of improving

living standard of every normal family.

In Vietnam, these terms are quite new and novel to many people, that

even those who work in a financial institution have not been fully informed by

these terms. Therefore, the aim of our research is that we want to bring

international experience and apply knowledge as well as operations in Vietnam

in order to help Vietnamese residents expose easily to individual financial

services.

0.2. Overview of related studies (research situation)

Although financial inclusion have not been massively researched in

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Vietnam, there are some topics that related to and preceding our project. Some

noticeable project will be mentioned briefly here and after.

1. The topic: “ The development of microfinance in Vietnam” by Ths.

Nguyen Duc Hai.

This research focus on analysing the three main part: the common

problems of micro finance in the financial market, current situations of

developing microfinance in Vietnam, and suggestions on enhancing the

microfinance in Vietnam.

He also mentions the international situations from countries all around the

world and draw experience and suggestions for the situations in Vietnam.

Furthermore, by analysing, comparing and examining the numbers and figures,

the project of Nguyen Duc Hai gives limitations and causes of the problems, the

situation of microfinance can be enhanced effectively and efficiently.

2. The topic: “Identifying the model of sustainable development for

microfinance providers in Viet Nam. The Case of People’s Credit Funds in Ha

Tay and Thai Binh provinces” by Le Nhat Hanh.

In the research, the first issue raised is the concept of financial

sustainability of MFP and their theoretical and empirical issues. The second

issue is analyzing the relationship between efficiency and development

objectives of People’s credit fund and determinant of sustainable development

model for Microfinance. In addition, the last one is for policy implication and

recommendation for further studies.

After analysing figures, run model and identifying the model of

sustainable development for People’s credit fund, she gives some

recommendations to PCFs, CCF and other support agencies based on those

findings. And she ends with limitations of the study and suggests areas for

further research.

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