1 CHAPTER RESEARCH INTRODUCTION above research results acknowledging the positive relationship between the level of access and the sustainability level of MFIs Therefore, in order to develop the activities of MFIs and the author conduct research on factors affecting the levels of sustainability and accessibility of MFIs in Vietnam 1.3 Objectives of the study The overall objective of the dissertation Researching factors affecting MFIs operations in Vietnam to propose recommendations to develop microfinance activities of MFIs in Vietnam 1.4 Research question Main research questions of the dissertation: Factors affecting microfinance activities of MFIs in Vietnam? This question will be solved by answering specific questions, including: (i) What are the activities of MFIs? (ii) What are the analytical and operational indicators used by MFIs? (iii) Factors affecting the operations of MFIs, focusing on the sustainability of MFIs and the level of accessibility? (iv) Factors affecting the performance of MFIs in Vietnam are identified by analysis and assessment of MFIs' operational status in terms of accessibility level and sustainability level? (v) Main findings from the model of factors affecting the sustainability of MFIs in Vietnam? (vi) Main findings from model results studying the factors affecting the level of accessibility to loans of clients to MFIs in Vietnam? 1.5 Object and scope of the dissertation 1.5.1 Research subjects Research objects are factors affecting MFIs' operations in Vietnam 1.5.2 Research scope Scope of research: The disertation research the MFIs (official and semi-official) in Vietnam In order to to assess deeply the factors affecting microfinance activities of MFIs in terms of customers, customer research of MFIs (working with models, operating scale, legal forms, the author carry on the research in different regions are implemented, including: Thanh Hoa MFIs, One-member MFIs (TYM), M&D Development Center, Center for Women and Community Development (CWCD), Microfinance Fund because of the Community Development (MFCDI) Scope of research time: Secondary data on MFIs collected in the period of 2011 - 2016 Secondary data on customers was collected at MFIs during the period from September to November 2016 1.6 Research Methods 1.6.1 Approach the research problem MFIs' activities are assessed through two main aspects: the level of access, the level of sustainability and the positive relationship between these two aspects Therefore, the thesis will study the factors affecting the level of sustainability and the factors affecting the level of accessibility of MFIs in Vietnam 1.1 The neccessary of the disertation The theory and practice of microfinance show that microfinance plays an important role in socio-economic development, especially in poverty reduction In Vietnam, access to bank credit from the poor, policy beneficiaries as well as micro enterprises tends to be increasing difficult The unofficial credit market existing in the form of Hua, Ho and Phuong is presenting in both urban and rural areas with great risks and increasingly sophisticated activities that are causing negative consequences for society Meanwhile, although being inconsiderable in terms of both quantity and market share the traditional microfinance institutions (MFIs) still rank the second in the level accessity for customer in the market only after VBSP (Le Thanh Tam, 2015) However, Viet Nam MFIs are operating inefficiently in the market due to many difficulties in competitive environment, legal environment and funding sources Therefore, investigating positive and negative factors influencing MFIs' operations in Vietnam will be an important basis in proposing solutions to develop the operation of the MFIs in Viet Nam in the future These reasons inspires the author selecting the topic "Factors affecting the operation of microfinance institutions in Vietnam" to investigate the factors to contribute to solve current problems in MFIS in Viet Nam 1.2 Overview of research situation There are many different notions about how to assess the performance of MFIs, this can be devided into four ways: Firstly, basing on financial performance; Secondly, through basic criterias (1) the level of customer access, (2) the sustainability of the organization; Thirdly, basing on objectives: (1) accessibility of microfinance to targeted customers, (2) financial sustainability, (3) impacts of activities (social objectives); Fourth, assess microfinance activities through the perspective of MFIs and customers Although there have been many studies in the world and Vietnam has carried out the evaluation of MFIs' activities through two basic criteria: the level of sustainability and accessity of MFIs but only mention the perpective of MFIs rather than from clients Therefore, inheriting previous research results as well as practical research conditions in Vietnam, the author analyzes and evaluates MFIs activities through two basic criteria: (1) sustainability of MFIs and (2) the level of accessity to identify factors affecting the level of sustainability and accessibility by qualitative research methods Next, quantitative research is used to deeply examine the factors affecting the sustainability of MFIs and verify the factors affecting the level of accessibility of MFIs (from customers) In Vietnam, there have been many studies showing the positive relationship between the level of accessibility and the level of sustainability (Pham Bich Lien, 2016; Le Thanh Tam, 2008; Nguyen Quynh Phuong, 2017) This research inherits the 1.6.2 Data system The research sample with secondary data sources includes: (1) MFIs data is taken from annual reports, financial reports and reports published by 34 MFIs in the Mix market or announced to Microfinance working group for the period of 2011 - 2016; (2) Customer data sources were collected from 291 customer surveys on microfinance products and solutions implemented by the Microfinance Working Group in October 2016 Primary data collected by the author implementing expert interview method and group discussion 1.6.3 Research Methods (i) Qualitative research methods, including: Methods of analyzing and synthesizing theory, Modeling method, Hypothesis method, Control comparison, Expert method, Group discussion method (ii) Quantitative research methods, including: Building questionnaires and scales; data sources and survey surveys; cleaning data; statistical analysis; Use models to analyze influencing factors Model 1: Analysis of factors affecting the sustainability of MFIs (OSS) by binary regression models (Binary logistics Regression) and Stata software applications 12.0 Model 2: Analysis of factors affecting the level of access to loans of MFIs and customers with Heckman's two-step regression model with two criteria used to assess the level of access to customers' loans are: (1) the ability to receive a loan; (2) the total amount of money borrowed by a customer 1.7 New contributions of the thesis 1.7.1 New academic and theorical contributions The dissertation has studied factors affecting MFIs' activities, focusing on analyzing factors affecting the level of access and sustainability (OSS) of MFIs by both qualitative and and quantitative methods with models Nadiya Marakkath's model (2014) has been applied with adjustment in which "legal form" variable is added to be siutable with the characteristics of MFIs in Vietnam and analysing factor affects OSS Previous studies have shown that the "average loan value" variable negatively affects OSS, the "scope of activities" and "legal forms" variable of the CPOs not affect OSS clearly However, contrary to the above results, the thesis results show that: (i) "average loan value" not have statistically significant correlation with OSS; (ii) "scope of activities" and "legal form" are in correlation with OSS The main reason for the difference between these results is due to: (i) There have been numerous of MFIs serving middle-income customers or applied new operating methods in many other countries Meanwhile, Vietnam MFIs still focus on poor customers and operate in the traditional way; (ii) Viet Nam has specific legal framework for different types of MFIs, while other countries apply a common legal framework for all MFIs In the two-step testing model, three variables affecting the level of accessibility to MFIs’s loans of clients has been added namely "customer qualification", "debt repayment methods", "loan conditions " The highlight results of this model are: (i) variables: "loan value", "educational level", "number of people in working age" have reversely effects "borrowing possibility” ”Meanwhile, the variables“ age ”,“ gender ”,“ interest rate ”and“ loan term ”do not have a clear impact on the“ ability to borrow ” (ii) The model of factors affecting the loan value indicates that “number of people in working age”, “Loan term” are proportionally related to “loan value”; “disbursement procedure” is inversely associate to “Loan value”; “Age”, “Gender”, “Educational level”, “Economic status” “Loan used purpose”, “Interest rate” have no clear effects to “Loan value” This is due to different characteristics in their activities and targeted customers in compare to other microfinance institutions 1.7.2 New findings and proposals are drawn from the research results and surveys of the dissertation Based on the research results, two groups of recommendations to develop MFIs' activities in Vietnam are proposed with: (1) MFIs need to have a specific development roadmap based on the influencing factors such as legal form reason, scope of operations, capital, products and technology, (2) State Bank and related agencies: need to supplement and complete the legal framework, create a good environtment for the operation of MFIs, create a solid basis for microfinance institutions activities, and at the same time, creating policy for supporting capital, human resources, interest rate, infrastructure, suitable to particular microfinance institutions in order to create favorable conditions for them to improve their competitiveness and sustainable development 1.8 The layout of the thesis In addition to the introduction and conclusion, the thesis content consists of 05 chapters: Chapter 1: Introduction to research Chapter 2: Theoretical basis of MFIs and factors affecting MFIs' operations Chapter 3: Actual situation of microfinance institutions in Vietnam Chapter 4: Models and results of research on factors affecting MFIs' operations in Vietnam Chapter 5: Recommendations to develop activities of microfinance institutions in Vietnam CHAPTER THEORETICAL FRAMEWOR OF MICROFINANCE ORGANIZATION AND FACTORS AFFECTING THE OPERATION OF MICRO-FINANCIAL INSTITUTIONS 2.1 Development history and the role of microfinance institutions (MFIs) The development history of the microfinance industry has started a long time with starting from savings groups and unofficial credit groups for the poor Until now microfinance is not only considered as a tool of poverty reduction, but also a tool of socio-economic development Microfinance is one of the ways of economic development to provide other financial services and services to low-income people in society to serve the needs of spending and investment Microfinance is both a banking tool and a development tool 5 MFIs are official and semi-official organizations (programs and projects are registered to operate with any state management agency) providing microfinance services, for non-profit purposes Institutions providing microfinance services are divided into areas: (i) official sector: commercial banks, development banks, formal MFIs registered under the law of credit institutions; (ii) Semi-official sector: NGOs providing microfinance, NGOs providing microfinance; (iii) unofficial sector: units, individuals, population groups, shops, mutual funds, groups, savings groups (J.Ledgerwood, 2003) 2.2 Activities of microfinance institutions MFIs can choose to provide services in a single or integrated approach with the following main activities: (1) financial intermediation activities, (i) credit operations, (ii) activities capital mobilization, (iii) micro insurance activities, (iv) other financial activities; (2) social intermediary activities: (i) business development activities, (ii) social service provision activities To assess microfinance activities, the following groups of indicators are often used: (1) Analyzing and assessing the level of customer accessibility: (i) Width of access (number and level of customer growth, credit balance and savings; product diversification) service provision); (ii) Depth of access (average loan level, average loan level); (2) Analysis and assessment of MFOs sustainability: (i) Sustainability index group: Self-sustaining ratio operational stability (OSS), FSS self-sustainable financial ratios, equity capital growth and ISS institutional leverage and sustainability; (ii) Profitability indicators: Return on total assets (ROA), Return on equity (ROE); (iii) index of loan portfolio quality (overdue debt ratio, bad debt ratio) 2.3 Factors affecting the operation of microfinance institutions MFI's activities depend on many factors, dividing into groups: (1) Factors belonging to MFIs, including: (i) Factors belonging to organizational characteristics of MFIs (such as: age, property nature and organizational model); (ii) Factors belonging to the conditions and operability of MFIs (such as financial capacity, human resources, service products, distribution systems, information technology systems); (iii) Factors of governance and operation of MFIs (such as objectives, missions, development strategies and business plans, operational management capacity of MFIs, financial management capacity, risk management and crisis response capabilities; (2) The environmental factors are analyzed according to the PESTLE model, including groups: (i) key political factors; (ii) key economic factors; (iii) major social factors; (iv) Infrastructure and technology factors; (v) Legal factors; (vi) The factors of natural conditions; (vii) other factors This is an important theoretical framework for analyzing the operational status of MFIs in Vietnam as well as analyzing the factors affecting MFIs' operations, serving as a foundation for proposing solutions for operational development of MFIs in Vietnam in the near future CHAPTER ACTUAL SITUATION OF MICRO-FINANCIAL ORGANIZATIONS IN VIET NAM 3.1 Development history of microfinance activities in Vietnam The microfinance market in Vietnam has been formed and developed since the 90s until present, along with changes in the viewpoint of recognizing from a hunger eradication and poverty reduction tool to an important role in socio-economic development With two parallel approaches that are led by the State and market-based in providing microfinance services, Vietnam's microfinance market still has potential to develop but also requires MFIs to be more competitive serve target customers better 3.2 Assessing the status of microfinance activities of MFIs in Vietnam 3.2.1 Achievements (i) The level of accessibility: MFIs have achieved relatively good access and depth to their target customers (ii) Regarding sustainability: Sustainability of MFIs is gradually being improved Highlights of MFIs compared to commercial banks are good portfolio quality with low NPL ratio 3.2.2 Limitation (i) The level of accessibility: The level of accessibility of MFIs is increasingly improved However, it is still very low compared to Vietnam's potential (ii) Sustainability: The level of sustainability of MFIs is still unstable and differentiated among organizations; most MFIs have not reached the institutional sustainability level 3.2.3 Reasons Causes from factors of microfinance institutions: (i) Factors of MFIs' characteristics (age, legal form, asset size, scope of activities); (ii) Factors under conditions and operational capability of MFIs (human resources, information management system - MIS); (iii) Factors of governance and operation of MFIs (objectives, missions, business plans, products and services provided, distribution channels; awareness of laws regulating activities and regulations) regulations related to conversion); Causes from factors of operating environment of MFIs, including: (i) Economic factors (capital from the state budget decreases, foreign capital sources decline after Vietnam becomes a country middle income, macro policies on lending rates); (ii) Social factors (characteristics of population groups such as age, educational level, gender, geographical and ethnic characteristics); (iii) Legal factors (regulations on operation and management, supervision of activities of different types of microfinance organizations; regulations related to capital mobilization; regulations related to conversion types of MFIs, regulations relating to expanding the scope of operations and customers of MFIs; (iv) Factors of natural conditions (climate change is increasingly strong); (v) Factors from the market and competitors (competitive market is increasingly fierce and not really equal); (vi) Microfinance development strategy at the national level (Microfinance is a core element in the national comprehensive financial strategy) 7 CHAPTER MODELS AND RESULTS OF RESEARCH ON FACTORS AFFECTING MFIS' OPERATIONS IN VIETNAM 4.1 Model and results of research on factors affecting the sustainability of MFIs 4.1.1 Models and research hypotheses In order to analyze the factors affecting MFI's performance in Vietnam, the author uses binary regression models (Binary logistics Regression) and Stata software GLP AGE Operational selfsustainability index (OSS) Capital structure Total loan portfolio Scope of activities of MFIs Figure 4.1: Factors affecting the sustainability of MFIs' operations Source: Author's synthesis from previous studies based on Nadiya Marakkath's model, 2014; Pinky Dutta and Debabrata Das, 2014; Francisco Olivares-Polanco & Tradha Ramanan, 2012) LnOSS = β + β LnPAR > 30 + β LnEAR + β LnALSPB + β GLP + β AGE + Regression model is defined as follows: + MFIs' operation by the time of research LOC1 Scope of (= 1) if MFI operates activities of nationwide; MFIs (=0) if MFIs operate in province or within districts + LOC2 Scope of (= 1) if MFIs operate activities of in the whole MFIs province, (= 0) if MFIs operates in one district only + Legal forms (= 1) if MFIs operate in LEGAF1 of MFIs the semi-formal form of microfinance programs/projects, (= 0) if MFIs operate in the forms of Social Funds or lisenced MFIs LEGAF2 Legal form (= 1) if MFIs operate of MFIs in the form of social funds, (= 0) if MFIs operate in the form of lisenced MFIs or programs/projects OSS Operational Operating income SelfTotal operational sustainability expenses ratio - Legal form of MFIs amount + Gross loans portfolio Age of MFIs Numbers of Year of Age of MFIs Risk ratio of portfolio Average loan per customer loans per loans borrower Number of borrowers β LOC + β LOC + β LEGAF1 + β LEGAF2 + µ Figure 4.1: Dependent variables, explanatory variables and hypotheses in the model summarized from literature review Variable Definition Formula PAR 30 > Portfolio at risk (>30) Overdue debts>30 days Total outstanding loans EAR Capital structure Average Total Equity Total assets Total outstanding ALSPB Expected References signals Cull & partners (2007); Ghatak (2000); Francisco Olivares-Polanco & Tradha Ramanan (2012); Intellecap( 2010); Ayayi & Sene (2007); Ayayi and Sene (2010); Becker(2013); Pinky Dutta Debabrata Das(2014); Nadiya Marakkath (2014) + Nadiya Marakkath (2014); Bogan (2008) Nadiya Marakkath (2014); + M Nadiya, Francisco Olivares-Polanco & Tradha Ramanan (2012) Nadiya Marakkath (2014) Venkatraman & RajSekhar (2008); Ayayi & Sene (2007) Crombrugghe & partners (2008); Venkatraman & TrajSekhar (2008) Venkatraman & RajSekhar (2008); Ayayi & Sene (2007) Crombrugghe & partners (2008); Venkatraman & RajSekhar (2008) Venkatraman & RajSekhar (2008); Ayayi & Sene (2007) Crombrugghe & partners (2008); Venkatraman & RajSekhar (2008) Venkatraman & RajSekhar (2008) Venkatraman RajSekhar (2008) & Source: Authors’ synthesis basing on existing literature 4.1.2.Results and Discussion 4.1.2.1 Descriptive statistics of the variables Figure 4.2: Descriptive statistics of variables Minimum Maximum Average Standard Variable Unit Observation value value value deviation OSS % 104 39 290 139.39 43.08 PAR % 104 224 4.80 29.72 EAR % 104 100 43.34 27.98 ALSPB VND 1,000 104 1,458,31 63,000,00 5,207.81 63.25 GLP VND 1,000 104 983,601 2,400,000,000 119,285,419.24 328,052,477 28 AGE Year 104 24 8.73 6.41 Source: Statistics results from Stata based on financial reports of 34 MFIs period (2011-2015) The statistics describe the variables of the model, except for the dummy variable LOC (scope of operation) and LEGAF (legal form), in Table 4.2, which shows that in general MFIs have achieved sustainable performance targets (The average value of OSS is 139.39 However, there are MFIs that only meet OSS target of 39%, which is much diffirent with MFIs obtaining the highest OSS of 290% Other variables such as PAR, EAR, ALSPB, GLP, AGE have asignificant difference between the highest and the lowest value with the relatively high standard deviation, indicating a big difference between MFIs on observed indicators 4.1.2.2 Regression results Multivariate regression model with the least squares method (Ordinary least squares - OLS) with Stata software is used to verify, then check the phenomenon of variance of the variance by heteroskedasticity test for conclusion fruit Chi2 (1) = 49.46; Prob> spend = 0.0000, which means the model has variance change phenomenon Therefore, the author fix this phenomenon by Robust technique Table 4.3: Estimated results of factors affecting OSS Original Variable Coefficient P-value Intercept -3.217808 LnPAR>30 -0.0316416* 0.072* LnEAR 0.3305043*** 0.000*** LnALSPB 0.1341518ns 0.511 LnGLP 0.1194703* 0.081* ns LnAGE 0.0287681 0.718 LOC1 -0.148921ns 0.464 LOC2 0.381412** 0.009** LEGAF1 0.0594789ns 0.540 LEGAF2 0.4691555*** 0.000*** R2 0.4655 0.0000*** No of Observation 104 - Note: ***, **, *: statistical significance at α = 1%, 5%, 10% ns: not statistical significanct Source: Statistics results from Stata based on financial reports of 34 MFIs period 2011 – 2015 10 4.1.2.3 research results discussion The research results of factors affecting the sustainability of MFIs in Vietnam show that there are factors affecting the sustainability of MFIs' operations, which are ranked according to the degree of influence gradually, including: (1) MFI's legal form, (2) MFI's scope of operations, (3) capital structure, (4) total investment portfolio, (5) portfolio risk ratio (PAR > 30) The legal form of MFIs has the greatest impact on the sustainability of MFIs MFIs operating in the form of microfinance programs /projects, social funds or official MFIs will be governed by legal documents at different levels in conditions and standards to ensure security, limiting the increase of MFIs operational risks when they become "mature" Research results of the model are carried out in the period (2011-2015) as the initial stage of very few formalized MFIs (only MFIs) There are many difficulties that can affect the performance of MFIs after transforming makes the short-term sustainability of these organizations lower than before (when operating in the form of social funds) However, in the long term, the increase in professionalism in MFIs' operations will play an important role in supporting these organizations to develop sustainably Therefore, officialization MFIs is still considered as a way to conform to the law The operational scope of MFIs is also an important factor affecting the sustainability of MFIs' activities If MFIs self-limit their activities within a small area, they will limit their ability to reach customers and increase market share thus affecting the sustainability of the organization However, MFOs / MFIs that expand their scope of operation too quickly can also reduce the level of sustainability due to the increase in management costs and operating costs while the market share expansion will be more difficult because of the fierce competition of large credit institutions such as commercial banks and PCFs, etc This shows that MFIs need to determine the scope of activities in accordance with the scale and development capacity of the organization The structure of capital impacted positively with sustainability means that MFIs will have a higher level of sustainability if they increase the proportion of equity Therefore, there should be a policy to attract resources to develop equity, especially resources from the private sector The portfolio has a positive influence on sustainability Increasing the portfolio will contribute to sustainable development of MFIs In order to increase the investment portfolio, MFIs need to research and develop appropriate products and services in capital mobilization, lending and other financial services such as diversifying types of savings, lending and collection debt at interest rates, by term, by season, deploying micro insurance products; taking part in collecting and paying taxes, electricity and water charges, telephone, internet and mobile banking, proceeding to provide non-cash payment services to better meet the increasing demands of customers who are the poor or and living in rual areas 11 12 Risk ratio of portfolio has reversed effect on sustainability Therefore, it is necessary to apply the financial management system in accordance with current regulations and international practices, including liquidity management, credit management, debt quality management, financial management and coefficient management, capital safety to reduce the risk ratio of the investment portfolio, ensure MFIs can operate more safely and sustainably 4.2 Models and of research results on factors affecting customers' accessibility to loans 4.2.1 Research model and research hypotheses Through literature review and taking into account the characteristics of MFIs in Vietnam, the factors affecting the level of access to loans of microfinance customers are divided into two groups as follows: (i) Dependent factors characteristics of customers: age, gender, educational level, professional qualifications, living conditions and income of customers, number of employees in the family, purpose of loan use; (ii) Factors of credit institutions: loan term, disbursement procedures, loan conditions, lending interest rates Heckman's two-step regression model is used to test hypotheses based on the relationship between dependent variables and independent variables Dependent variable is the level of access to customers' loans from MFIs The two criteria used to assess the level of access to loans by microfinance clients are: (1) the ability to receive loans; (2) the total loan amount that a microfinance customer receives The first step: using the probability unit model to estimate the dependent variable value based on the probability that microfinance customers receive or not receive micro credit The Binary Logitis model is used to examine the extent to which the independent variables affect the possibility of getting a loan k (1) Table 4.5: Independent variables in the model of factors affecting the probability to borrow loans from MFIs of cusomer and research hypotheses Pi = E ( Y = | X i ) = β + ∑ i =1 βiX i + U Pi is the probability that a customer can borrow a loan ( Y =1); β , β …, βk are regression coefficients; Xi ( i =1,…,k) are independent variables The specific model is as follows: Independent variable Variables Factor 1: Loan value (GTVVMi) Measurement the value of the loan that customers access or borrow from MFIs each time Factor 2: Customer age (TUOI) the borrower's age Expected relationship + + - Factor 3: Customer gender (GIOITINH) the borrower's gender, is if the borrower is male, is if the borrower is female + + Factor 4: Customer education level (HOCVAN) a dummy variable, if the customer has graduated from high school, it will receive a value of 1, a non-graduated customer of level will receive a value of Factor 5: s a dummy variable, is if the Professional customer is a unskilled worker, qualification is if a customer with a of customers professional qualification from (PROFENMO an unskilled worker N) Number of people in working Sources Nguyen Phuong Le, Nguyen Mau Dung (2011) Nguyen Minh Ha & Lai Thi Thu Huyen (2012) Zeller (1994), Phan Đình Khơi (2013), Nguyễn Văn Tâm (2010), Nguyễn Quốc Oánh & Phạm Thị M ỹ Dung (2010) Nathan Okurut (2006) Võ Thị Thúy Anh (2010), Ha (1999), Barslund, M & Tarp, F, (2006) Nathan Okurut (2006), Nguyen Van Tam (2010) Barslund, M & Tarp, F, (2006) Vaessen, 2000; Võ Văn khúc, 2010 Nguyễn Thị Kim Anh, Vũ Tú Bang (2015) + Vo Van Khuc (2010), Phan Dinh Khoi (2011) + 13 Independent variable Measurement Variables Factor 6: age of borrowers' households Number of people in working age (LAODONG) 14 Expected relationship - Factor 7: Customer's economic status (HONGHEO) Okurut (2006), Vu Van Khuc (2008), Truong Dong Loc & Tran Ba Duy (2010), Do Ngoc Tan (2012) Vuong Quoc Duy, Le Long Hau & Marijke D'haese (2010), Ha (2010) a dummy variable, the value is if the client is poor, is if the client is not the poor + Factor 8: Purpose of using loans (MUCDICH) a dummy variable, if the purpose of using a client's loan for production or business, the value is 1; if customers using funds for other purposes the value is Is the term of the loan Factor 9: calculated by month Loan term (THOIHAN) Factor 10: Form of debt a dummy variable, if the debt is repayment paid at the end of the period, the (HINHTHUC value is 1; Repayment in other TRANO) forms such as monthly, weekly or non-fixed times the value is a dummy variable, if the loan Factor 11: conditions simply, the value is 1, if not simply the value is Loan (MFIs not have conditions conditions (DIEUKIENV for collateral) AY) Independent variable Sources Khalid Mohamed (2003), Nguyen Quoc Oanh and Pham Thi My Dung (2010), Khalid Mohamed (2003) Nguyen Quoc Oanh & Pham Thi My Dung (2010) - Nguyen Quoc Oanh & Pham Thi My Dung (2010) - The author proposed + The author proposed Variables Factor 12: Disbursement procedure (THUTUC) Factor 13: Interest rate (LAISUAT) Measurement Expected relationship Sources + a dummy variable, the disbursement procedure is fast and convenient, the value is 1; if the disbursement procedure is not fast, convenient the value is The loan interest rate is calculated by year - Nguyen Quoc Oanh, Pham Thi My Dung (2010) Nguyen Minh Ha & Lai Thi Thu Huyen, 2012 Nguyen Phuong Le & Nguyen Mau Dung (2011) Nguyen Minh Ha & Lai Thi Thu Huyen (2012) Source: Author's synthesis from previous studies - The second step, the ability to access loans is measured by the amount of loans that customers receive from MFIs The least squares method (OLS) is used in the second step in Heckman's model The regression model used here is as follows: GTV VMi = α + βiX i + εi In particular, the dependent variable is the value of the loan that the ith customer receives from MFIs; Xi is a vector of independent variables that can affect the dependent variable, including: Including age, gender, education, professional qualifications, living conditions and income of customers, number of employees in the family, purpose of loan use, loan term, disbursement procedures, loan conditions, lending interest rates 15 16 Table 4.6: Independent variables in the model of factors affecting customer loan value from MFIs and research hypotheses Independent variables Factor Independent variables Factor Measure Factor 1: Customer Measured by the borrower's age age (TUOI) Factor 2: Customer The borrower's gender, if gender (GIOITINH) the borrower is male, the value will be and if the borrower is female, the value is Factor 3: Customer A dummy variable, if the education level customer has graduated (HOCVAN) from high school, a value of and a non-graduated customer of level will receive a value of Factor 4: Professional qualification of customers (PROFENMON) Factor 5: Number of people in working age (LAODONG) A dummy variable, if a customer is a unskilled worker, the value is 1; if a customer with a professional qualification from an unskilled worker, the value is Expected relationship + Ha (2001) - Barslund, M & Tarp, F, (2006) + Nguyen Quoc Oanh, Pham Thi My Dung (2010) Vo Van Khuc (2010) + Number of people in working age of borrowers' households - Factor 6: Customer's economic status (HONGHEO) a dummy variable, the value is if the client is Source Truong Dong Loc & Tran Ba Duy (2010), Do Ngoc Tan (2012) Vuong Quoc Duy, Le Long Hau & Marijke D'haese (2010), Ha (2001) Nguyen Quoc Oanh & Pham Thi My Dung Measure Expected relationship (2010) Nguyen Thi Kim Anh & Vu Tu Bang (2015) poor, is if the client is not the poor Factor 7: Purpose of a dummy variable, if the using loans purpose of using a client's (MUCDICH) loan for production or business, the value is 1; if customers using funds for other purposes the value is Is the term of the loan Factor 8: Loan term calculated by month (THOIHAN) Factor 9: Form of debt a dummy variable, if the debt repayment is paid at the end of the (HINHTHUCTRANO) period, the value is 1; Repayment in other forms such as monthly, weekly or non-fixed times the value is a dummy variable, if the Factor 11: Loan loan conditions simply, the value is 1, if not simply the conditions value is (MFIs not (DIEUKIENVAY) have conditions for collateral) Factor 12: a dummy variable, the Disbursement disbursement procedure is procedure (THUTUC) fast and convenient, the value is 1; if the disbursement procedure is not fast, convenient the value is Factor 13: Interest rate The loan interest rate is (LAISUAT) calculated by year Source + Tran Lam et al (2015) + Phan Dinh Khoi (2013) The author proposed The author proposed The author proposed + Nguyen Thi Kim Anh & Vu Tu Bang (2015), Nguyen Minh Ha & Lai Thi Thu Huyen (2012) 17 18 4.2.2 Research results 4.2.2.1 Descriptive statistics Figure 4.7 Statistics describing variables in the model = 0.000), showing that the model reflects the relationship between GTV and independent variables With R2 = 0.1253 independent factors in the model explained 12.53% of the change of GTV dependent variable Number of Minimum Maximum Average Standard observations value value value deviation GTV 1.000.000 đ 291 30 10,82199 0,50295 TUOI năm 291 21 68 44,52234 0,66405 LAODONG người 291 15 2,50859 0,07405 THOIHAN tháng 291 10 18 12,96735 0,12461 LAISUAT %/năm 291 1,2 21 13,50227 0,23676 Source: Statistical results from Stata based on microfinance customer survey data 4.2.2.2 Results of model testing Variables Unit Table 4.9: Dimension of the impact of factors on customer borrowing posibility Hypothesis Research Conclusion Factor Variable name result Research results are contrary to Loan value + GTVVMi the hypothesis Customer age Figure 4.8: Results of estimation of factors affecting the posibility of customer to borrow a loan at MFIs Variables Coefficient P-value Marginal probability Customer gender TUOI +/- GIOITINH +/- P-value Free coefficient (blocking factor) 0,2361663 GTV -0,1460151 0,001 -0,0064713*** 0,009*** TUOI 0,0367981 0,176 0,0016309ns 0,241ns LAODONG -0,4524528 0,024 -0,0200524* 0,056* THOIHAN -0,1777932 0,126 -0,0078797ns 0,151ns LAISUAT 0,0245064 0,750 -0,0010861ns 0,750ns GIOITINH -2,192704 0,076 -0,2462552ns 0,321ns HOCVAN -1,88556 0,006 -0,1255466** 0,045** CHUYENMON -0,3698301 0,658 -0,014668ns 0,627ns HONGHEO 1,870861 0,179 0,0465137** 0,036** MUCDICH 3,05595 0,000 0,3893678*** 0,007*** DIEUKIENVAY 5,966833 0,000 0,8211193*** 0,000*** R2 0,7117 0,0000*** Number of observations 291 Note: ***, **, *: statistically significant at α = 1%, 5%, 10%, ns: not statistically significant (Source: Calculated from Stata software based on microfinance customer survey data) - Step Logit model results Testing the multivariate regression model by OLS method on Stata software, then checking the phenomenon of variance of errors by heteroskedasticity test ( result: Chi2 (1) = 13.79; Prob > chi = 0,0002), the model has variance change phenomenon The results of model testing after correcting with Robust technique descirbed in Table 4.10 Statistic F with statistically significant at 1% level (Prob> F n/a n/a - Education level of customers Professional qualifications of customers HOCVAN - CHUYENMON + n/a Number of people in working age in the familiy of customers Economic status of customers LAODONG HONGHEO +/- MUCDICH + + Research results are consistent with the hypothesis Research results are contrary to the hypothesis + Purpose of using loans Research results are contrary to the hypothesis Research results are consistent with the hypothesis 19 20 Figure 4.11: the impact of factors on customer loan value from MFIs Loan term Forms of debt repayment THOIHAN HINHTHUCTRANO - - n/a Variables are excluded from the model + Loan conditions Disbursement procedure Interest rate DIEUKIENVAY + THUTUC + LAISUAT - Factor Research results are consistent with the hypothesis Variables are excluded from the model Customer age Customer gender Education level of customers Professional qualifications of customers Number of people in working age in customer’s family Variable name Hypothesis TUOI GIOITINH HOCVAN + + n/a n/a CHUYENMON - n/a Variables Coefficient P-value Free coefficient (blocking factor) 1,718545 TUOI 0,003782ns 0,909ns LAODONG 0,1022414** 0,011** THOIHAN 0,0611533*** 0,000*** LAISUAT -0,0081705ns 0,477ns GIOITINH -0,0097988ns 0,939ns ns HOCVAN 0,0706336 0,368ns CHUYENMON -0,068218ns 0,393ns HONGHEO 0,151747ns 0,105ns DIEUKIENVAY 0,2256134ns 0,570ns THUTUC -0,3459569** 0,043** R2 0,1253 0,0000*** Số quan sát 222 Note: ***, **, *: statistically significant at α = 1%, 5%, 10% ns: not statistically significant +/- + n/a Economic status of customers Purpose of using loans HONGHEO - MUCDICH + Loan term THOIHAN + HINHTHUCTRANO - Variables are excluded from the model DIEUKIENVAY THUTUC - n/a - Forms of debt repayment Loan conditions Disbursement procedure Interest rate LAISUAT Conclusion n/a LAODONG n/a Source: Research results of the author Figure 4.10: Results of estimating the factors affecting the loan value of customers from MFIs Research result Research results are consistent with the hypothesis Variables are excluded from the model Research results + are consistent with the hypothesis Research results are consistent with the hypothesis + n/a Source: Research results of the author 4.2.2.3 Discuss research results Results of the research on the factors affecting the level of access to loans of customers with MFIs in Vietnam show that: 21 22 There are factors that affect the posibility of customers to access loans from MFIs in Vietnam, which are arranged according to the degree of influence gradually, including: (1) loan conditions, (2) loan purposes, (3) customer's education level, (4) customer’s economic status, (5) Number of people in working age in customer’s family , (6) Loan value Borrowing conditions are the most influential and favorable factor to the posibility of microfinance clients to access loans Because most microfinance clients are the poor who not have stable income, collateral therefore the simple loan conditions like lending without collateral helping them easier to access the loan from microfinance institutions The results show that microfinance clients with a loan purpose for production are more likely to access credit than other loan purposes In fact, in addition to the demand for loans for production, poor customers also need to borrow for other legitimate purposes such as paying school fee for children, covering expenses when being sick or other unexpected demand The "priority" of MFIs for production loans has partly limited the ability of poor clients to borrow capital from MFIs The demographic factors of borrowers and the value of the loan not significantly affect the ability of customers to access loans Therefore, in order to increase the posibility of customers to access loans, MFIs need to research to provide loan conditions and develop lending products in accordance with the conditions of microfinance customers, able to meet the demand of customers better There are three factors that affect the value of loans arranged according to the degree of lower impact, including: (1) borrowing procedures, (2) Number of people in working age in customer’s family, (3) the loan term In fact, the increase in the average loan value of MFIs to meet customers' needs is an inevitable trend Decision No 20/2017 / QD - TTg has raised the maximum lending value for a semi-official MFI customer to VND50 million and Circular 03/2018 / TT-NHNN also stipulates the total outstanding loans of official MFIs for a microfinance customer must not exceed VND 50 million, the total outstanding loans for another customer must not exceed VND 100 million, higher than the VND 30 million value prescribed by Circular No 07 / 2009 / TT-NHNN This is an important foundation for both official and semi-official MFIs to increase the value of loans to customers Although the targeted customers of MFOs / MFIs aim the poor, many customers who have escaped from poverty, expanded production and business still need to continue borrowing and borrowing greater value from MFIs because they have been working with MFIs for a long time In addition, continued lending to customers with good credit history and loyalty will help reduce risks and transaction costs for MFIs According to research results, disbursement procedures are the most influential and negative factors to the value of loans Therefore, in order for customers to have access to loans with increasing value, MFIs need to be simplize lending procedures to be compatible with customers status At the same time, it is necessary to improve customers knowledge in completing loan documents and procedures, contributing to improving customers' borrowing capacity CHAPTER RECOMMENDATIONS TO DEVELOP ACTIVITIES OF MICROFINANCIAL INSTITUTION IN VIETNAM 5.1 Recommendations to develop the activities of microfinance institutions in Vietnam 5.1.1 Recommendations for microfinance institutions In order to develop microfinance activities, MFIs need to implement recommendations in the following priority order: (i) Developing a plan and a roadmap to officialize MFIs appropriately Microfinance programs and projects should transform into QXH before officialize; (ii) Determining the scope of activities in accordance with the scale and development capacity of MFIs MFIs should develop and operate in a province, then develop their activities out of the province cautiously when the necessary conditions have been achieved to increase the level of access and sustainability; (iii) Actively exploiting capital, paying special attention to developing owners' equity from sources suitable to MFIs; (iv) Increasing loan portfolio by designing loan products with diversification; simplization, flexiblization conditions and procedures for borrowing, being suitable for each customer; appling technology to products to increase competitiveness; (v) Strengthening governance and administration especially risk management; (vi) Improving the quality of human resources For credit officers, it is necessary to recruit local people, stick to the local area to understand each customer as well as credit history of customers to apply loan conditions, disbursement procedures and capital recovery suitable for each customer; (vii) Improving understanding for MFIs' customers on lending and borrowing activities through propaganda and opening training courses to raise awareness of customers about financial knowledge; (viii) Completing information management system 5.1.2 Recommendations for state administrative agencies (i) For the Government: it is necessary to supplement and complete the legal framework, create a solid legal background for MFIs' activities; budget allocation for microfinance development; implementing preferential policies, developing infrastructure to support MFIs' activities towards comprehensive finance (ii) For The Sate Bank: it is necessary to provide an appropriate mechanism to create favorable conditions for MFIs to have opportunities to access capital sources at appropriate costs; The promulgated interest rate policy for MFIs should be more practical to ensure that MFIs can develop sustainably and be able to compete with other credit institutions; There should be a support mechanism to improve the transformation capacity of MFIs; policies need to be "unleashed" legally, helping MFIs to develop new products; It is necessary to have a mechanism to create conditions for official MFIs to develop credit and savings products, transfer money through increasing the micro-debt balance for a customer and at the same time increase the ratio of outstanding loans to other customers in the total outstanding loans; The State Bank needs to supplement and complete legal documents related to MFIs' activities to ensure consistency and conformity with the characteristics of MFIs At the same time, accelerating the process of implementing policies to meet the development needs of MFIs 23 24 (iii) For the Ministry of Finance: having appropriate tax and charge policies to support the development of microfinance activities; Issuing accounting regimes suitable to the characteristics of official MFIs (iv) For the Provincial People's Committees: it is necessary to create a favorable environment to support MFIs to develop locally; (v) For the microfinance working group: It is necessary to better complete the role of connecting MFIs and propose policy recommendations and development capacity of MFIs MFIs should develop and operate in a province, then develop their activities out of the province cautiously when the necessary conditions have been achieved to increase the level of access and sustainability; (3) Actively exploiting capital, paying special attention to developing owners' equity from sources suitable to MFIs; (4) MFIs need to increase loan portfolio by designing credit products with diversification; simplizing, and providing flexible borrowing conditions and procedures suitable for each customer; apply technology to products to increase competitiveness; (5) Strengthening governance and administration especially risk management; (6) Improving the quality of human resources For credit officers, it is necessary to recruit local people, stick to the local area to understand each customer as well as credit history of customers to apply loan conditions, disbursement procedures and capital recovery suitable for each customer; (7) Improving understanding for MFIs' customers on lending and borrowing activities through propaganda and opening training courses to raise awareness of customers about financial knowledge; (8) Completing information management system Secondly, recommendations for the State Bank of Vietnam and related agencies: (1) Supplementing and improving the legal framework, creating a solid framework for MFIs' operations, (2) Having a mechanism to support capital , human resources, interest rates, infrastructure, in accordance with the characteristics of MFIs to create favorable conditions for MFIs to improve their competitiveness and develop sustainably according to the strategy national finance In the future, the demand for financial products of the poor, low-income customers, small-scale and super-small enterprise customers will increase However, in order to become one of the optimal choices for customers, MFIs need to have specific action strategies to promote the advantages of the organization Basing on the operational development objectives of MFIs and the influence of the proposed factors indicated in the disertation, MFIs should choose recommendations in order of priority to develop microfinance activities based on organizational resources In the current situation, it is difficult for MFIs to expand their scale, scope of operation or change quickly Therefore, MFIs need to rely on the specific conditions of each organization as well as changes of regimes and policies in each period to build a sustainable development strategy, not being seperated from the initial operational goal is to serve the poor abd low-income customers In addition to the achieved results, the disertation also has some limitation: (i) Factors affecting the accessibility of MFIs to customers only be identified and evaluated through qualitative research results Therefore, it is not possible to quantify the impact of each factor on the accessibility of MFIs to customers from MFIs perspective; (ii) Quantitative research model on factors affecting the accessibility of customers with MFIs from new customers refers to the ability to access micro-credit products (core products of MFIs) Currently, while other financial products of MFIs have not been fully developed, research results can ensure certain consistency with the operational characteristics of MFIs However, if analyzing the factors affecting the accessibility of customers to MFIs (including the ability to access all MFIs products and services, not only credit products), the research results will be more completed Therefore, further studies are necessary to fix the above limitations of the study CONCLUSION Basing on gathering, interpreting, demonstrating and analyzing data of MFIs through scientific methods, the Research has completed the following contents: The study has reviewed and systematized the theoretical framework of microfinance activities of MFIs Basing on the evaluation criteria of MFIs' activities under the organization's perspective with criteria: (i) the level of accessibility, (ii) the level of sustainability the distersation deeply analyze the factors affecting the activities of MFOs / MFIs' actions by investigating factors affecting the level of access and sustainability of MFIs On the basis of (i) Generating of factors affecting microfinance activities of MFIs, (ii) Assessing the situation of microfinance activities of formal and semiformal MFIs in Vietnam according to sets of criteria are: level of access and sustainability, (iii) Using models to analyze image factors to clarify factors affecting MFOs operations in Vietnam: Model 1: Applying Nadiya Marakkath's model (2014), The disertation is based on theoretical framework and adjusted and supplemented with legal forms to suit Vietnamese MFIs, proposing a model of distribution factor that affects the level of operational sustainability (OSS) The results show that there are factors affecting the sustainability of MFOs / MFIs in terms of the level of influence, including: (1) the legal form of MFIs, (2) the scope of MFIs' activities, (3) capital structure, (4) total portfolio, (5) portfolio risk ratio (PAR> 30) Model 2: Basing on the theoretical framework, the disertation added variables namely the professional level of the customer, the form of debt repayment, loan conditions to propose models analyzing factors affecting the level of access to loans of MFIs customers with analysis steps The results show that: factors affecting the ability of customers to access loans from MFIs in Vietnam arranged according to the level of influence, including: (1) loan conditions, (2) loan purposes, (3) the borrower's educational level, (4) the borrower's economic status, (5) the number of working people in customer’s family (6) the value of the loan; There are factors that affect the value of loans arranged according to the degree of the lower impact, including: (1) borrowing procedures, (2) the number of working people in customer’s family, (3) the loan term (iv) Basing on the research results, two groups of recommendations to develop microfinance activities of MFIs in Vietnam are proposed as follows: First, for MFIs : (1) Need to build plan and have a roadmap to officialize MFIs appropriately Microfinance programs and projects should be transformed into QXH before being officialized; (2) Need to determine the scope of activities in accordance with the scale LIST OF ACADEMIC JOURNAL OF THE AUTHOR RELATED TO THE DISERTATION Dao Lan Phuong, Le Thanh Tam (2017), "Factors affecting the selfsustainability of microfinance institutions in Vietnam", Journal of Economics & Development, No 243 (II) September 2017, ISSN 1859 - 0012, p 69 -78 Dao Lan Phuong, Dao Thuy Van (2017), "Current situation and solutions to develop microfinance activities in Vietnam", Journal of Forestry Science and Technology No 20, October 2017, ISSN 1859 - 3828, p 50-60 Dao Lan Phuong (2016), "Experiences of countries and orientation to improve institutions for microfinance in Vietnam", Forestry Science and Technology Journal, October 2016, ISSN 1859 - 3828 , p.193 - 201 Dao Lan Phuong (2017), "Developing microfinance activities towards Financial Inclusion in Vietnam by 2020", Proceedings of National Scientific Conference "Perfecting financial institutions for development Vietnam stock market and insurance market sustainably ”, Hanoi on April 7, 2017, National Economics University Publishing House (lesson No 25), p 385 – 399 Dao Lan Phuong (2017), Researching factors affecting the level of customers' accessility to loans of microfinance institutions in Vietnam, Grassroots level project under Decision 882 / QD-DHLN - Science and Technology on May 22, 2017, Acceptance according to Decision No 2293 / QD-DHLN-KHCN dated November 21, 2017 Dao Lan Phuong, Bui Thi Minh Nguyet, Dao Thi Hong, Nguyen Thi Lan Anh (2018), "Financial sustainability of microfinance institutions in Vietnam: Current situation and recommendations ”, Forestry Science and Technology Journal No 3/2018, ISSN 1859 - 3828, p 63 - 73 Le Thanh Tam, Dao Lan Phương, Le Nhat Hanh, Do Ngoc Mai (2018), "Determinants of operational self-sustainability of microfinance institutions in Vietnam", International conference on Finance, Accounting and Auditing "Accounting and Finance in the digital age", Hanoi City, November 23rd, 2018, National economics university publishing house (bài số 55), tr 666 - 680  ... activities, (iv) other financial activities; (2) social intermediary activities: (i) business development activities, (ii) social service provision activities To assess microfinance activities,... in Vietnam Chapter 4: Models and results of research on factors affecting MFIs' operations in Vietnam Chapter 5: Recommendations to develop activities of microfinance institutions in Vietnam... history of microfinance activities in Vietnam The microfinance market in Vietnam has been formed and developed since the 90s until present, along with changes in the viewpoint of recognizing from