Does household credit benefit child schooling for the poorest ethnic minorities? New evidence from a transitional economy

Abstract

This paper provides an original contribution concerning the influence of microcredit on child school dropout rates in the poorest regions in Vietnam. Two crucial empirical problems for the linkage between microfinance and children's education are sample selection bias and the endogeneity of microcredit. Using a combination of the instrumental variable method and the Heckman approach to overcome these problems, the finding is that microcredit increases the opportunity for households to send their children to school through two main channels—increasing household per capita income and moving households out of poverty.