Poor household access to financial services in Ben Tre province, 2018

MINISTRY OF EDUCATION AND TRAINING THE STATE BANK OF VIETNAM

BANKING UNIVERSITY HO CHI MINH CITY

TRAN NGOC TRA GIANG

POOR HOUSEHOLD ACCESS

TO FINANCIAL SERVICES

IN BEN TRE PROVINCE

BACHELOR THESIS

MAJOR: FINANCE - BANKING

CODE: 7340201

SUPERVISOR

TRAN NGUYEN MINH HAI, MSc.

HO CHI MINH CITY, 2018

i

ABSTRACT

The bachelor thesis is conducted with topic ―Poor household access to financial

services in Ben Tre province‖. There are two main sources of financing which poor

household access for their financial needs, including formal and informal financial

institutions. It is likely to be not easy for poor household access to formal financial

source due to strict requirement of documents and poor household‘ limitation of

financial knowledge. The large proportion of the poor clients has been only joining the

SPBV's lending programs or microfinance institutions in Ben Tre province. Besides,

they also access to informal financial services due to its convenience and flexible

requirements, ignoring the fact that these informal financial activities are not

guaranteed legally.

Based on the theoretical and empirical studies which are stake holder theory and

theory illustrating the crucial role access to finance are addressed, the qualitative

approach was applied in this study in order to (i) summarize of successful and notable

experiences in the access to financial services of the poor in the world and lessons for

Vietnam; (ii) review and analyze current situation of poor household access to financial

services in Ben Tre; and (iii) recommend for the access to financial services of the poor

households in Ben Tre. Along with five chapters, this study shows the successful and

notable experiences in the access to financial services of the poor in the world and

lessons for Vietnam. This study also analyzes current situation of access to financial

services of the poor households in Vietnam and especially in Ben Tre and recommends

required conditions to the poor household access to financial services in Ben Tre.

ii

STATEMENT OF ORIGINAL AUTHORSHIP

The work contained in this thesis has not been previously submitted for a

degree at any other higher education institution. To the best of my knowledge and

belief, the thesis contains no material previously published or written by another person

except where due reference is made.

Ho Chi Minh City, December 26, 2018

Author

Tran Ngoc Tra Giang

iii

ACKNOWLEDGEMENT

After four years studying at Banking University of Ho Chi Minh City, I gained a

lot of knowledge and experience from talented, devoted and enthusiastic lecturers, who

always support for students and education development.

Firstly, I would like to express my sincere gratitude to my advisor Tran Nguyen

Minh Hai, Msc., Lecturer of Faculty of Finance, Banking University Ho Chi Minh City

for the continuous support of my study and related research, for her patience,

motivation, and immense knowledge. Her guidance helped me in all the time of

research and writing of this thesis

My sincere thanks also goes to Le Hoai An, Msc., Lecturer of Faculty of

Banking, Banking University Ho Chi Minh City for his dedicated teaching and sharing

of valuable knowledge, skills and experience while I have studied at this university.

Last but not the least, I would like to thank my parents for supporting me

spiritually throughout writing this thesis and my life in general.

Due to time constraints and practical experience, it is inevitable that certain

mistakes will be avoided. I look forward to receiving your comments and suggestions

to improve my topic.

Best regards!

iv

LIST OF ABBREVIATIONS

ADB Asian Development Bank

BANSEFI Bank for National Savings and Financial Services

BARD Bangladesh Academy for Rural Development

BRAC Bangladesh Rural Advancement Committee

CCF The Central People‘s Credit Funds

CCT Conditional cash transfer programs

CEF Caixa Economica Federal

CEP Capital Aid Fund for Employment of the Poor

CGAP Consultative Group to Assist the Poor

FGD Focus-Group Discussions

FWED The Fund for Women in Economic Development

GDP Gross Domestic Product

GSO General Statistics Office of Vietnam

IFAD The International Fund for Agricultural Development

IFC International Finance Corporation

InM Institute of Microfinance

MF Microfinance

MFI-NGOs Microfinance Institution-NonGovernment Organizations

MFIs Microfinance Institutions

MFPs MicroFinance Programs

MOF Ministry of Finance

PCFs People's Credit Funds

PESTLE Political, Economic, Social, Technological, Legal and Environmental

POS Point of Sale

ROSCAs Rotating savings and credit associations

v

SBV State Bank of Vietnam

SHG Self Help Group

UNCTAD United Nations Conference on Trade and Development

UNDP United Nations Development Programme

VBARD Vietnam Bank for Agriculture and Rural Development

VBSP Vietnam Bank for Social Policies

VWU Vietnam Women‘s Union

vi

LIST OF FIGURES AND TABLES

Table Name Page

1.1 Summary of interviewees‘ background 4

4.1

People with an account at a formal financial

institution by education (in %) in 2017

39

4.2

Key characteristics of Vietnam‘s major financial

service providers for the poor in 2014

58

4.3 Experiences of key providers in Ben Tre 43

Figure Name Page

1.1 Research framework of bachelor thesis 7

2.1 Poverty headcount Ratio in 2008 ($1.25 Per Day Poverty Line) 11

2.2 The link between typical financial needs and financial services

for poor households.

15

2.3 Access to financial services 17

3.1 Poverty Status (Percentage) 20

3.2 Evolution of number of bank correspondents according to type

of activities

29

4.1 Urban & rural population in 2017 34

4.2 Economies with relatively low account ownership 39

4.3 The percentage of poor households, near poor households in Ben

Tre by their living areas

40

4.4 Poor household‘s access to financial services in Ben Tre 42

4.5 Poor households‘ sources of credit and savings in Ben Tre 44