risk preferences (higher numbers indicate more risk aversion) and discount rates
(higher numbers indicate less patience) as differentiated by a positive demand for
credit in 2007. Positive demand includes both potential and actual demand for
credit, and includes not only households who applied for credit but also households
who wanted to apply for credit but were discouraged by; for example, the fear of
being rejected. Unlike risk preferences and discount rates which were assessed at
the individual-level, credit data were calculated at the household-level.
In Yen Chau district there are two formal lenders, both of which are governmentowned: the Vietnam Bank for Social Policies (VBSP) and the Vietnam Bank for
Agriculture and Rural Development (VBARD). The VBSP’s mandate is to target
the poor, that is, those with incomes below the poverty line, and offer them
subsidized credit. As shown in Chap. 5, the VBSP fails to achieve its target
objective, whereas the VBARD is a commercially-oriented bank and so does not.
The results show that respondents living in households which had no positive
demand for credit from the VBSP were, on average, significantly more risk averse
according to the self-assessment method than respondents living in households
which had a positive demand for credit. In terms of how discount rates and a
positive demand for credit were related, the only statistically significant difference
in mean discount rates with regards to a positive credit demand was for credit
demanded from the VBARD, as the mean discount rate for respondents living in
households with a positive demand for credit from the VBARD was significantly
greater than that of respondents living in households with no positive demand for
credit from the same bank.
We can also see from the table that individuals had very high discount rates,
ranging between 73 % and 85 %, indicating that respondents may not consider
formal sources of credit offering low interest rate loans to be available to them,
because otherwise the discount rate would better reflect the market discount rate,
which tends to be much lower.
Table 12.6 reports the Pearson correlation coefficients found for risk preferences
and discount rates, and the total amount of credit demanded from various sources.
Households who wanted to apply for credit but who were discouraged from doing
so were recorded as having demanded 0 VND worth of credit. The results show that
higher risk aversion was associated with lower credit demand across all sources,
with a statistically significant correlation. In other words, people more willing to
take risks were more likely to live in households which demanded more credit.
These results support the results shown in Table 12.5, that risk avoidance is
negatively associated with credit demand. Statistically significant correlations
between discount rates and the amount of credit demanded were all positive,
indicating that higher amounts of credit demanded from a household were
associated with higher discount rates (meaning less patience) from individuals
living in that household. This too supports the results shown in Table 12.5.
476
M. Zeller et al.
(higher numbers indicate less patience) as differentiated by a positive demand for
credit in 2007. Positive demand includes both potential and actual demand for
credit, and includes not only households who applied for credit but also households
who wanted to apply for credit but were discouraged by; for example, the fear of
being rejected. Unlike risk preferences and discount rates which were assessed at
the individual-level, credit data were calculated at the household-level.
In Yen Chau district there are two formal lenders, both of which are governmentowned: the Vietnam Bank for Social Policies (VBSP) and the Vietnam Bank for
Agriculture and Rural Development (VBARD). The VBSP’s mandate is to target
the poor, that is, those with incomes below the poverty line, and offer them
subsidized credit. As shown in Chap. 5, the VBSP fails to achieve its target
objective, whereas the VBARD is a commercially-oriented bank and so does not.
The results show that respondents living in households which had no positive
demand for credit from the VBSP were, on average, significantly more risk averse
according to the self-assessment method than respondents living in households
which had a positive demand for credit. In terms of how discount rates and a
positive demand for credit were related, the only statistically significant difference
in mean discount rates with regards to a positive credit demand was for credit
demanded from the VBARD, as the mean discount rate for respondents living in
households with a positive demand for credit from the VBARD was significantly
greater than that of respondents living in households with no positive demand for
credit from the same bank.
We can also see from the table that individuals had very high discount rates,
ranging between 73 % and 85 %, indicating that respondents may not consider
formal sources of credit offering low interest rate loans to be available to them,
because otherwise the discount rate would better reflect the market discount rate,
which tends to be much lower.
Table 12.6 reports the Pearson correlation coefficients found for risk preferences
and discount rates, and the total amount of credit demanded from various sources.
Households who wanted to apply for credit but who were discouraged from doing
so were recorded as having demanded 0 VND worth of credit. The results show that
higher risk aversion was associated with lower credit demand across all sources,
with a statistically significant correlation. In other words, people more willing to
take risks were more likely to live in households which demanded more credit.
These results support the results shown in Table 12.5, that risk avoidance is
negatively associated with credit demand. Statistically significant correlations
between discount rates and the amount of credit demanded were all positive,
indicating that higher amounts of credit demanded from a household were
associated with higher discount rates (meaning less patience) from individuals
living in that household. This too supports the results shown in Table 12.5.
476
M. Zeller et al.