Farmers' behavioral intention to use formal credit: a study in Cantho City, Vietnam

Abstract

Exploring motivation for accessing formal credit is increasingly receiving interest from researchers and practitioners. However, few of their works have specifically investigated in the context of Vietnam on empirical basis. This paper aims to empirically examine the determinants of farmer‟s behavioral intention towards using formal credit in Vietnam. Drawing on Theory of Reasoned Action (TRA) model, this study suggests a modified TRA model associated with other constructs (i.e. perceived service quality, and perceived value). Using a data set of 250 cases in a survey and multiple regressions, the analyses indicated that formal credit‟s usage is enabled substantially by perceived service quality and subjective norm following by perceived value and attitude. The results imply that to facilitate the farmer‟s behavioral intention to use formal credit, banking authorities and commercial banks need to continuously improve quality of lending service which focuses on simplifying procedures of approving and disbursing fund, and to consider educating the farmers and local associations the promotion of ease of use and usefulness of formal credit as well as its distinct advantages compared with informal credit or “black credit”. The findings suggest several implications for leadership of commercial banks and banking authorities.