Access and impact of trade credit on the profit of rice – growing household in the Mekong Delta

Abstract

The study aims to estimate the impact of trade credit on rice farming profits in the Mekong Delta. Using primary data collected from 572 rice-farming households in six provinces of the Mekong Delta, this paper employs the Propensity Score Matching (PSM) method for estimation. The initial PSM results indicates seven factors influencing households' access to trade credit, including two negative factors: household income and experience, and five positive factors: land area, familiarity duration, geographic distance, social status, and number of dealers. The second one using four comparison methods: nearest neighbor, radius, stratification, and kernel matching, reveals that households accessing trade credit have higher rice production profits, by VND 0.386 to 0.482 million per 1,000m² compared to those without access.