Assessing the effects of social capital on trade credit in shrimp farming in the Mekong Delta, Vietnam

Abstract

This study assesses and identify major factors of social capital that affect the use of trade credit among shrimp farmers and how these contribute to and affect the profits of households in coastal provinces of the Mekong Delta, Vietnam. Data was collected through observations, informal discussions, and interviews with 364 shrimp farmers from the Ca Mau, Bac Lieu, Ben Tre and Tra Vinh provinces. The Probit and Tobit regression models were applied to analyze and evaluate the effect of social capital on the use of trade credit and the amount of trade credit used by farmers. The results show that many social capital factors affect the use of trade credit by shrimp farmers in the investigated areas, including in descending order of importance: profit, wholesale agents, colleague-friend-family line-neighbor, and trust. Besides the factors above, other factors such as agricultural land value, households’ income, distance, experiences in shrimp production, households’ assets, savings, profits of the previous crop, and the average household income had also an effect on trade use and amount of trade credit used by shrimp farming households.