Impact Of Household Credit On Education

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Doan, D., Gibson, J., Holmes, M. (2014). Impact of Household Credit on Education and Healthcare Spending by the Poor in Peri-Urban Areas, Vietnam. Journal of Southeast Asian Economies, 31(1), 87-103. The authors of this article are affiliated with the University of Waikato in New Zealand (The University of Waikato, n.d.). Tinh Doan was a PhD student at the university for three years, between 2007 and 2010, who studied the impact of microfinance on human capital formation (Doan, n.d.). In the past four years, he has published ten articles that relate to Vietnam and how their economy is influenced by a multitude of factors, including import competition, productivity spillover, and employee benefits (Doan, n.d.). The other two men, John…show more content…
The article uses a statistical test, Propensity Score Matching (PSM), with a control group of 107 households, who does not receive any financial support, and a treatment group of 304 households, who receive financial support from any type of formal lender. The PSM matches the control group family to the treatment group family by identifying their similarities. In order to be matched, each family must have similar observable characteristics/factors which includes an income that falls below the poverty line of VND6 million (Doan et al., 2014). The most relevant aspect of this idea is that it shows the correlation between families who formal receive micro-credit and those who do not. The authors found that the families who received micro-credit spent about VND81,000-99,000 more on education and VND93,000 more on health care (Doan et al., 2014). There is evidence, at the 5 percent confidence level, which shows that the impact is significant. Therefore, families in peri-urban Vietnam, who receive a formal micro-credit loan, are more inclined to spend money on health care and education. I can use this to show that microcredit does alter how families spend their money. This article uses a quantitative method to show impact. Doan offers an example of a flaw in their method resulting from selection bias if the correlation between matched houses occurs due to the unobservable
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